UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended:
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A |
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 past 12 months, and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As
of February 12, 2025, there were
TEL-INSTRUMENT ELECTRONICS CORP.
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Unaudited Condensed Consolidated Financial Statements. | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 20 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 24 |
| Item 4. | Controls and Procedures. | 24 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings. | 26 |
| Item 1A. | Risk Factors. | 26 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 26 |
| Item 3. | Defaults Upon Senior Securities. | 26 |
| Item 4. | Mine Safety Disclosures. | 26 |
| Item 5. | Other Information. | 26 |
| Item 6. | Exhibits. | 27 |
| Signatures | 28 | |
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements.
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2024 | March 31, 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Equipment and leasehold improvements, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred tax asset, net | ||||||||
| Other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses -vacation pay, payroll and payroll withholdings | ||||||||
| Deferred revenues - current portion | ||||||||
| Operating lease liabilities – current portion | ||||||||
| Accrued expenses - other | ||||||||
| Line of credit | ||||||||
| Promissory notes – related parties | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities – long-term | ||||||||
| Other long term liabilities | ||||||||
| Deferred revenues – long-term | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, 1,000,000 shares authorized, par value $0.10 per share | ||||||||
| Preferred stock, | ||||||||
| Preferred stock, | ||||||||
| Preferred stock, | ||||||||
| Common stock, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Engineering, research, and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| (Loss) income from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense – judgement | ( | ) | ||||||||||||||
| Interest expense – other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other net income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Loss) income before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax (benefit) expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Net (loss) income | ( | ) | ( | ) | ( | ) | ||||||||||
| Preferred dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) income attributable to common shareholders | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Basic net (loss) income per common share | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Diluted net (loss) income per common share | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Three Months Ended December 31, 2024, and 2023
(Unaudited)
| Series
A Convertible Preferred Stock | Series
B Convertible Preferred Stock | Series
C Convertible Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||
| #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | Additional
Paid-In Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balances at October 1, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| - | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | | ||||||||||||||||||||||||||||||||||
| Series
A Convertible Preferred Stock | Series
B Convertible Preferred Stock | Series
C Convertible Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||
| #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | Additional
Paid-In Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balances at October 1, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| - | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | | ||||||||||||||||||||||||||||||||||
5
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Nine Months Ended December 31, 2024, and 2023
(Unaudited)
| Series
A Convertible Preferred Stock | Series
B Convertible Preferred Stock | Series
C Convertible Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||
| #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | Additional
Paid-In Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balances at April 1, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||
| - | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | | ||||||||||||||||||||||||||||||||||
| Series
A Convertible Preferred Stock | Series
B Convertible Preferred Stock | Series
C Convertible Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||
| #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | #
of Shares Issued | Amount | Additional
Paid-In Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balances at April 1, 2023 | $ | $ | - | - | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
| - | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of Series B and C Convertible Preferred Stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | | ||||||||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Amortization of right of use assets | ||||||||
| Provision for inventory obsolescence | ( | ) | ||||||
| Non-cash stock-based compensation | ||||||||
| Changes in assets and liabilities: | ||||||||
| Increase in accounts receivable | ( | ) | ( | ) | ||||
| Decrease (increase) in inventories | ( | ) | ||||||
| Decrease in prepaid expenses and other current assets | ||||||||
| (Decrease) increase in accounts payable | ( | ) | ||||||
| Decrease in accrued payroll, vacation pay and payroll taxes | ( | ) | ( | ) | ||||
| Increase (decrease) in deferred revenues | ( | ) | ||||||
| Decrease in operating lease liabilities | ( | ) | ( | ) | ||||
| Decrease in other long term liabilities | ( | ) | ( | ) | ||||
| Increase in accrued expenses - other | ||||||||
| Decrease in accrued legal damages | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Draw from line of credit | ||||||||
| Proceeds from issuance of Preferred Stock | ||||||||
| Proceeds from promissory notes-related parties | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash at beginning of period | ||||||||
| Cash and restricted cash at end of period | $ | $ | ||||||
| End of period | ||||||||
| Cash | $ | $ | ||||||
| $ | $ | |||||||
| Beginning of period | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| $ | $ | |||||||
| Supplemental cash flow information: | ||||||||
| Taxes paid | $ | $ | ||||||
| Disposal of equipment and leasehold improvements | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
7
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Business, Organization and Liquidity
Business and Organization
Tel-Instrument Electronics Corp. (“Tel,” “TIC” or the “Company”) has been in business since 1947. The Company is a leading designer and manufacturer of avionics test and measurement instruments for the global, commercial air transport, general aviation, and government/military defense markets. Tel provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. The Company sells its equipment in both domestic and international markets. Tel continues to develop new products in anticipation of customers’ needs and to maintain its strong market position. Its development of multi-function testers has made it easier for customers to perform ramp tests with less operator training, fewer test sets, and lower product support costs. The Company has become a major manufacturer and supplier of Identification Friend or Foe (“IFF”) flight line test equipment over the last two decades.
The Company is publicly traded and was quoted on the Over-the-Counter Market Place (“OTCQB”) under the symbol “TIKK.”
Liquidity
On
December 31, 2024, the Company had positive working capital of $
The
Company had a $
On
September 18, 2024, Bank of America renewed the line of credit for $
During
June 2024, the Company’s CEO provided short term advances totaling $
The Company believes it has sufficient cash on hand and expected cash flow from operations for the next twelve months due to the increase in business and the opportunities we have included in our projections. Revenues and profits are expected to improve significantly starting in the next fiscal year 2026 due to the success of our SDR-OMNI product and the commencement of CRAFT ECP and MADL production.
Based on the foregoing, we believe that our expected cash flows from operations, and fulfillment of our $8.4 million open orders will be sufficient to operate in the normal course of business for next 12 months from the issuance date of these unaudited condensed consolidated financial statements.
Currently, the Company has no material future capital expenditure requirements.
8
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Tel-Instrument Electronics Corp. as of December 31, 2024, the results of operations, change in stockholders’ equity and statements of cash flow for the nine months ended December 31, 2024 and December 31, 2023. These results are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated 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, 2024 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. Accordingly, the unaudited condensed consolidated 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, 2024, as filed with the United States Securities and Exchange Commission (the “SEC”) on June 28, 2024 (the “Annual Report”).
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation in the unaudited condensed consolidated statements of cash flow.
Revenue Recognition
Under Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company accounts for revenue recognition in accordance with ASC 606.The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The ASC 606 defines a five-step process to achieve the core principle and, in doing so, it is possible more judgement and estimates may be required within the revenue recognition process than are currently in use.
The Company generates revenue from designing, manufacturing, and selling avionic tests and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. The Company also offers calibration and repair services for a wide range of airborne navigation and communication equipment.
Nature of goods and services
The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each.
9
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 – Summary of Significant Accounting Policies (continued)
Test Units/Sets
The Company develops and manufactures unit sets to test navigation and communication equipment, such as ramp testers and bench testers for equipment installed in aircraft and ground radios. The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract, which is usually at the time of shipment. Revenue on products is presented gross because the Company is primarily responsible for fulfilling the promise to provide the product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears the risk of loss while the inventory is in-transit. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to the customer. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
When determining the transaction price of a contract, an adjustment is made if payment from the customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2024.
Replacement Parts
The Company offers replacement parts for test equipment, ramp testers, and bench testers. Similar to the sale of test units, the control of the product transfers at a point of time and therefore, revenue is recognized at the point in time when the obligation to the customer has been fulfilled.
Extended Warranties
The following table provides a summary of the changes in deferred revenues for the nine months ended December 31, 2024:
| Deferred revenues at April 1, 2024 | $ | |||
| Revenue recognized for the nine months ended December 31, 2024 | ( | ) | ||
| Deferred revenues at December 31, 2024 | $ |
Other Deferred Revenues
The
Company sometimes receives payments in advance of shipment. These amounts are classified as other deferred revenues. For the periods
ended December 31, 2024, and March 31, 2024, the Company had other deferred revenues of $
10
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 – Summary of Significant Accounting Policies (continued)
Repair and Calibration Services
The Company offers repair and calibration services for units that are returned for annual calibrations and/or for repairs after the warranty period has expired. The Company repairs and calibrates a wide range of airborne navigation and communication equipment. Revenue is recognized at the time the repaired or calibrated unit is shipped back to the customer, as it is at this time that the work is completed.
Other
The majority of the Company’s revenues are from contracts with the U.S. government, airlines, aircraft manufacturers, domestic distributors, international distributors for sales to military and commercial customers, and other commercial customers. The contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days, or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company’s contracts generally do not include a significant financing component. Payments received prior to the delivery of units or services performed are recorded as deferred revenues. The Company applied the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales. All sales are denominated in U.S. dollars. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. The Company chose to apply the available practical expedient as commission eligible sales orders are fulfilled within less than one year and commissions are generally paid by the Company within 30 days of the related sales order fulfillment.
Disaggregation of revenue
In the following tables, revenue is disaggregated by revenue category.
For the Three Months Ended December 31, 2024 | ||||||||
| Commercial | Government | |||||||
| Sales Distribution | ||||||||
| Test Units & Engineering | $ | $ | ||||||
| Repairs & Calibration | ||||||||
| Other | ||||||||
| $ | $ | |||||||
For the Three Months Ended December 31, 2023 | ||||||||
| Commercial | Government | |||||||
| Sales Distribution | ||||||||
| Test Units & Engineering | $ | $ | ||||||
| Repairs & Calibration | ||||||||
| Other | ||||||||
| $ | $ | |||||||
11
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 – Summary of Significant Accounting Policies (continued)
For the Nine Months Ended December 31, 2024 | ||||||||
| Commercial | Government | |||||||
| Sales Distribution | ||||||||
| Test Units & Engineering | $ | $ | ||||||
| Repairs & Calibration | ||||||||
| Other | ||||||||
| $ | $ | |||||||
For the Nine Months Ended December 31, 2023 | ||||||||
| Commercial | Government | |||||||
| Sales Distribution | ||||||||
| Test Units & Engineering | $ | $ | ||||||
| Repairs & Calibration | ||||||||
| Other | ||||||||
| $ | $ | |||||||
In the following table, revenue is disaggregated by geography.
For
the Three | For
the Three | |||||||
| Geography | ||||||||
| United States | $ | $ | ||||||
| International | ||||||||
| Total | $ | $ | ||||||
For
the Nine | For
the Nine | |||||||
| Geography | ||||||||
| United States | $ | $ | ||||||
| International | ||||||||
| Total | $ | $ | ||||||
For
the three months ended December 31, 2024, four customers accounted for sales of $
For
the three months ended December 31, 2023, three customers accounted for sales of $
12
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 – Summary of Significant Accounting Policies (continued)
The
Company, in addition to inside sales efforts, utilizes independent sales agents to sell its products to customers. A related party independent
sales agent earned $
The
same related party independent sales agent earned $
New Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. We are currently evaluating this guidance to determine the impact it may have on our consolidated financial statements related disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The guidance will first be effective in our annual disclosures for the year ending March 31, 2026, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures.
No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.
13
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Accounts Receivable, net
The following table sets forth the components of accounts receivable:
| December 31, 2024 | March 31, 2024 | |||||||
| Government | $ | $ | ||||||
| Commercial | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Note 4 – Inventories, net
Inventories consist of:
| December 31, 2024 | March 31, 2024 | |||||||
| Purchased parts | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished Goods | ||||||||
| Less: Inventory reserve | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Note 5 – Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of:
| December 31, 2024 | March 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Deferred charges | ||||||||
| Other receivables | ||||||||
| $ | $ | |||||||
Note 6 – Equipment and Leasehold Improvements
Equipment and leasehold improvements consist of the following:
| December 31, 2024 | March 31, 2024 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Automobiles | ||||||||
| Sales equipment | ||||||||
| Assets under finance leases | ||||||||
| Less: Accumulated depreciation & amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation and amortization expense related to
the assets above for the three months and nine months ended December 31, 2024 was $
14
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 – Line of Credit
The
Company has a line of credit with Bank of America with open availability up to $
As
of December 31, 2024, and March 31, 2024, the outstanding balances were $
On
April 1, 2024 Bank of America extended the Company line of credit with a maturity date of July 31, 2024, in addition the line of credit
cash limit amount was increased from $
Note 8 – Right of Use Assets and Operating Lease Liability
The
Company leases its facility in East Rutherford, NJ with monthly payments of $
The
Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the
discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate
the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term
of a lease. The Company estimated its incremental borrowing rate based on its credit quality, line of credit agreement and by comparing
interest rates available in the market for similar borrowings. The Company used a discount rate of
Right to use assets is summarized below:
| December 31, 2024 | March 31, 2024 | |||||||
| Right to use asset | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Right to use assets, net | $ | $ | ||||||
The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total lease liabilities recognized on the unaudited condensed consolidated balance sheet as of December 31, 2024:
| Remaining payments in fiscal 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total undiscounted future minimum lease payments | ||||
| Less: Difference between undiscounted lease payments and discounted lease liabilities | ( | ) | ||
| Present value of net minimum lease payments | ||||
| Less current portion | ( | ) | ||
| Operating lease liabilities – long-term | $ |
Total
rent expense for the three and nine months ended December 31, 2024 was $
15
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 – Stock Options Plans
The
Board of Directors (the “Board”) adopted on January 18, 2017, and ratified by the shareholders at the Annual Meeting on January
18, 2017, the Company’s 2016 Stock Option Plan (the “Plan”). The Plan provides for the granting of incentive stock
options, by a committee to be appointed by the Board (both the Board and the Committee are referred to herein as the “Committee”)
to directors, officers, and employees (excluding directors and officers who are not employees) to purchase shares of the Common Stock
of the Company, par value $
The Company accounts for stock-based compensation in accordance with FASB ASC 718 which requires the measurement of stock-based compensation based on the fair value of the award on the date of grant. The Company recognizes compensation cost on awards on a straight-line basis over the vesting period, typically four years. The Company estimates the fair value of each option granted using the Black-Scholes option-pricing model.
The
fair value of each option awarded is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions
noted in the following table. Expected volatilities are based on historical volatility of Common Stock. The expected life
of the options granted represents the period of time from date of grant to expiration (
| Dividend | Risk-free | ||||||||||||||||
| Yield | Interest rate | Volatility | Life | ||||||||||||||
| 2025 | % | % | % | ||||||||||||||
There were no options granted in the prior fiscal year.
A summary of the status of the Company’s stock option plans for the fiscal year ended March 31, 2024, and year to date December 31, 2024, and changes during the year are presented below (in number of options):
Number
of | Average
| Average | Aggregate | |||||||||||||
| Outstanding options at April 1, 2024 | $ | $ | ||||||||||||||
| Options granted | $ | |||||||||||||||
| Options exercised | $ | |||||||||||||||
| Options canceled/forfeited | ( | ) | $ | |||||||||||||
| Outstanding options at December 31, 2024 | $ | $ | ||||||||||||||
| Vested options at December 31, 2024 | $ | $ | ||||||||||||||
Remaining
options available for grant were
At
December 31, 2024, the unamortized compensation expense for stock options was $
For
the three months ended December 31, 2024, the Company recorded stock compensation costs of $
16
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10 – Income Taxes
FASB ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”) prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company does not have any unrecognized tax benefits.
The
tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities, gave rise to
the Company’s deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at
the enacted tax rate expected to be in effect when the differences reverse. The Company had approximately $
Note 11 – Net Income (Loss) per Share
Net income (loss) per share has been computed according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 260”), “Earnings per Share,” which requires a dual presentation of basic and diluted income per share (“EPS”). Basic EPS represents net income (loss) divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS to common stockholders reflects the potential dilution that could occur if securities, including preferred stock and options, were converted into common stock. The dilutive effect of outstanding options is reflected in earnings per share by use of the treasury stock method. The dilutive effect of preferred stock is reflected in earnings per share by use of the if-converted method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise and the amounts of average unrecognized compensation. For the three and nine months ended December 31, 2024 and nine months ended December 2023, since the Company has a net loss attributable to common shareholders, the effect of common stock equivalents is anti-dilutive, and as such, common stock equivalents have been excluded from this calculation.
| Three Months Ended | Three Months Ended | |||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Basic net (loss) income per share computation: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Less: Preferred dividends | ( | ) | ( | ) | ||||
| Net (loss) income attributable to common shareholders | ( | ) | ||||||
| Weighted-average common shares outstanding | ||||||||
| Basic net (loss) income per share | $ | ( | ) | $ | ||||
| Diluted net (loss) income per share computation | ||||||||
| Net (loss) income attributable to common shareholders | $ | ( | ) | $ | ||||
| Add: Preferred dividends | - | |||||||
| Diluted net (loss) income attributable to common shareholders | $ | ( | ) | $ | ||||
| Weighted-average common shares outstanding | ||||||||
| Incremental shares attributable to the assumed conversion of preferred stock | - | |||||||
| Total adjusted weighted-average shares | ||||||||
| Diluted net (loss) income per share | $ | ( | ) | $ | ||||
17
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 11 – Net Income (Loss) per Share (continued)
| Nine Months Ended | Nine Months Ended | |||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Basic net loss per share computation: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: Preferred dividends | ( | ) | ( | ) | ||||
| Net loss attributable to common shareholders | ( | ) | ( | ) | ||||
| Weighted-average common shares outstanding | ||||||||
| Basic net loss per share | $ | ( | ) | $ | ( | ) | ||
| Diluted net loss per share computation | ||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Add: Preferred dividends | - | - | ||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted-average common shares outstanding | ||||||||
| Incremental shares attributable to the assumed conversion of preferred stock | - | - | ||||||
| Total adjusted weighted-average shares | ||||||||
| Diluted net loss per share | $ | ( | ) | $ | ( | ) | ||
| December 31, 2024 | December 31, 2023 | |||||||
| Convertible preferred stock | ||||||||
| Stock options | ||||||||
The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share for the nine months ended:
| December 31, 2024 | December 31, 2023 | |||||||
| Convertible preferred stock | ||||||||
| Stock options | ||||||||
18
TEL-INSTRUMENT ELECTRONICS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12 – Segment Information
In accordance with FASB ASC 280, “Disclosures about Segments of an Enterprise and related information”, the Company determined it has two reportable segments - avionics government and avionics commercial. There are no inter-segment revenues.
The Company is organized primarily on the basis of its avionics products. The avionics government segment consists primarily of the design, manufacture, and sale of test equipment to the U.S. and foreign governments and militaries either directly or through distributors. The avionics commercial segment consists of design, manufacture, and sale of test equipment to domestic and foreign airlines, directly or through commercial distributors, and to general aviation repair and maintenance shops. The Company develops and designs test equipment for the avionics industry and as such, the Company’s products and designs cross segments.
Management evaluates the performance of its segments and allocates resources to them based on gross margin. The Company’s general and administrative costs and sales and marketing expenses, and engineering costs are not segment specific. As a result, all operating 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.
The tables below present information about reportable segments within the avionics business for the three and nine months ended December 31, 2024, and 2023:
Three Months Ended December 31, 2024 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross margin | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||
Three Months Ended December 31, 2023 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross margin | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) before income taxes | $ | $ | ( | ) | $ | |||||||||||||||
Nine Months Ended December 31, 2024 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross margin | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||
Nine Months Ended December 31, 2023 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross margin | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q and other reports filed by the Company from time to time with the SEC (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “may,” “will,” “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management are intended to identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and we caution you that these statements are not guarantees of future performance or events and are subject to risks, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
The key factors that are not within the Company’s control and that may have a direct bearing on operating results include, but are not limited to, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry, as well as the risk factors identified in the Company’s filings.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our unaudited condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
For purposes of this Quarterly Report, “Tel-Instrument,” “we,” “our,” “us,” or similar references refers to Tel-Instrument Electronics, Inc, unless the context requires otherwise.
Overview
The company recorded a substantial increase in revenues in the third quarter, but the gross margins were adversely impacted by substantial cost increases on our CRAFT test set (which is in its last year of production) as well as charges related to the CRAFT ECP which has gone over budget.
The Company reported net sales of $2,972,137 for the three months ended December 31, 2024, as compared to net sales of $2,403,099 for the same three month period in the prior fiscal year. The Company reported net sales of $7,591,655 for the nine months ended December 31, 2024, as compared to net sales of $6,835,123 for the same nine month period in the prior fiscal year.
Gross margin for the current quarter was $634,401 (21%) and for the three months ended December 31, 2023 was $968,118 (40%). The erosion of margin was primarily attributable to higher CRAFT component costs and increased fixed production costs as well as invoicing approximately $260,000 of the Navy Craft ECP margin true up as the program is nearing completion and engineering labor hours have exceeded our projections. Gross margin for the current nine months ended December 31, 2024 was $1,587,243 (21%) which is approximately 17 percentage points lower than the nine months ended December 31, 2023 of $2,622,152 (38%). This is primarily attributable to the Navy Craft ECP margin true up as noted above. Approximately $438,000 of Navy funding remains on this contract which should be completed in early fiscal year 2026. Once the development work is completed, production revenues of approximately $5 million per year are expected over a four-year period.
20
Overview (continued)
Net loss was $456,483 and $1,228,829 for the three and nine months ended December 31, 2024, as compared to an income of $133,809 and a loss of $6,052 for the same periods in the prior year, respectively. The increase in net loss in the current period is due to the CRAFT ECP costs increasing versus the forecasted levels.
Backlog orders on December 31, 2024, were $8.4 million compared to $7.2 million as of March 31, 2024. The backlog includes a $1.55 million order for the new MADL test set for the F-35 program which is expected to commence production later in the final quarter of fiscal 2025.
The Company continues to pursue opportunities in the domestic and international market for our Mode 5 test sets. We continue to receive substantial orders from the U.S. Government and Northrup Grumman for our AN/USM-708 (“CRAFT”) Mode 5 and MADL test sets.
TIC has spent several years and millions of dollars in developing our ground-breaking SDR/OMNI and SDR-OMNI/MIL product which will address both the commercial market for transponder and navigation test sets as well as competing in the military secure comm test set market. The SDR/OMNI product line supports a wide frequency range to accommodate new commercial and military waveforms in an industry leading 4.5-pound package. This is approximately half the weight of competitive test sets. It is also the only new multi-purpose test set which meets the Class 1 military environmental specifications. It utilizes the latest touch screen technology and has the capability to replace all TIC commercial test sets and military flight-line test sets with one handheld product. The Company started initial production deliveries in December 2022. The Company recently received an order from Airbus for SDR-OMNI test sets to replace the obsolete test sets used in their world-wide manufacturing. This is a significant win as Airbus evaluated competitive products and selected the SDR-OMNI due to its faster speed and ease of use. In August 2024, the Company received a follow-on order from Airbus with additional orders expected. We have added a direct sales representative for the SDR-OMNI and are instituting a customer demo program which should allow us to significantly extend our sales reach for smaller customers. To our knowledge, every commercial customer that evaluates our test sets versus the competition has selected the SDR-OMNI.
TIC recently released the SDR-OMNI/MIL test set which adds SIF and TACAN test capability. The SDR-OMNI/MIL has received positive reviews from the U.S. DOD and international military customers. We have also received an NSN number which is needed to sell to the U.S. military. We have already received purchase orders from Italy, South Korea, Germany and from the U.S. DOD. This is designed to replace thousands of obsolete military test sets currently in use. This is expected to be a significant driver of both revenues and future profitability. The current order backlog for the SDR-OMNI/MIL is $837,000 and these will be shipped in the fourth quarter and first quarter of fiscal year 2026. There are only two companies competing in this market space, but we believe that our SDR-OMNI/MIL design will be extremely competitive. TIC is also looking to add Mode 5 IFF test capability to this test set which would be the replacement for the TS-4530A which has sold over 3,000 units.
TIC is also exploring new avenues to broaden its product portfolio, including designing a high frequency test set for the Lockheed Martin F-35 program. This contract takes advantage of our expertise in RF technology. This is a completely new market for TIC as it involves high frequency communication signals. TIC recently received a $1.55 million production contract with Northrup Grumman for the new MADL test set. This is expected to go into production in the fourth quarter of this fiscal year.
Results of Operations
Sales
Net sales increased $569,038 or 24% to $2,972,137 for the three months ended December 31, 2024, as compared to net sales of $2,403,099 for the same three month period in the prior fiscal year. Net sales increased $756,532 or 11% to $7,591,655 for the nine months ended December 31, 2024, as compared to net sales of $6,835,123 for the same nine month period in the prior fiscal year. The respective increases in sales were due to a mix of product sale customer demand and the invoicing of the Navy Craft ECP.
Gross Margin
Gross margin for the current quarter was $634,401 (21%) and the three months ended December 31, 2023 of $968,118 (40%). The erosion of margin was primarily attributable to higher CRAFT component costs and increased fixed production costs being spread over decreased volumes in the first two months of the current quarter and invoicing approximately $260,000 of the Navy Craft ECP margin true up as the program is nearing completion and engineering labor hours have exceeded our projections. Gross margin for the current nine months ended December 31, 2024 was $1,587,243 (21%) which is approximately 17 percentage points lower than the nine months ended December 31, 2023 of $2,622,152 (38%). This is primarily attributable to the Navy Craft ECP margin true up as noted above.
21
Operating Expenses
Selling, general and administrative expenses increased $186,729 (45%) to $601,187 and $173,609 (11%) to $1,693,995 for the three and nine months ended December 31, 2024. The increases for both the three and nine months were due to the addition of two salespeople focused on the SDR-OMNI and SDR-OMNI/MIL in June 2024 and guaranteed commissions for the initial year of employment. This compared to $414,458 and $1,520,386, respectively for the three and nine months ended December 31, 2023.
Engineering, research, and development expenses increased $301,614 (98%) to $608,160 and $482,183 (53%) to $1,395,884 for the three and nine months ended December 31, 2024, as compared to $306,546 and $913,701 for the three and nine months ended December 31, 2023, respectively. Total engineering expense increased primarily as a result of the Navy ECP Contract non-recurring engineering expenditures (“NRE”) which are reimbursed and reduced engineering costs engineering time and materials completed during June 2024, with no new customer funded engineering projects currently.
(Loss) Income from Operations
As a result of the above, the Company recorded a loss from operations of $574,946 and $1,502,636 for the three and nine months ended December 31, 2024, as compared to an income from operations of $247,114 and $188,065 for the three and nine months ended December 31, 2023.
Other Expense, Net
Other net expense for the three and nine months ended December 31, 2024 was $27,509 and $77,472, respectively. Consisting primarily of line of credit interest, as compared to the three and nine months ended December 31, 2023, total other expense was $22,941 and $196,454, which was primarily a result of accrued interest related to the legal judgement that was settled in the prior fiscal year.
(Loss) Income before Income Taxes
The Company recorded a net loss before taxes of $602,455 and $1,580,108 for the three and nine months ended December 31, 2024, as compared to net income before taxes of $224,173 and a net loss before taxes of $8,389 for the three and nine months ended December 31, 2023.
Income Tax (Benefit) Expense
For the three and nine months ended December 31, 2024, the Company recorded income tax benefits of $145,972 and $351,279, and related increase in its deferred tax asset, as a result of the Company’s net loss respectively, as compared to income tax expense of $90,364 and a tax benefit of $2,337 for the three and nine months ended December 31, 2023, respectively.
Net (Loss) Income
The Company recorded net loss of $456,483 and $1,228,829 for the three and nine months ended December 31, 2024, as compared to net income of $133,809 and a net loss of $6,052 for the three and nine months ended December 31, 2023.
22
Liquidity and Capital Resources
At December 31, 2024, the Company had net working capital of $2,663,404 as compared to working capital of $4,249,777 at March 31, 2024. This included $192,783 cash on hand and $1,138,791 of accounts receivable.
The Company’s principal sources, and uses of funds were as follows:
Cash used in operating activities. For the nine months ended December 31, 2024, $369,730 in cash from operations was used, as compared to the nine months ended December 31, 2023, the Company used $6,316,840 which included $6,360,698 used for the settlement of the Aeroflex judgement.
Cash used in investing activities. For the nine months ended December 31, 2024, the Company did not use any cash for purchases of equipment as compared to the nine months ended December 31, 2023, the Company used $33,850.
Cash provided by financing activities. For the nine months ended December 31, 2024, the Company provided $430,500 from investing activities received from the Bank of America line of credit of $310,000 and short term related party loans of $120,500 as compared to $721,000 funds provided for in the nine months ended December 31, 2023 from issuance of Series B and C Preferred Stock from inventing activities.
The Bank of America line of credit was renewed, and the current line of credit matures July 31, 2025 with an available line of $1,000,000. As of December 31, 2024, $1,000,000 of the line of credit was used.
Moving forward, we believe that our expected cash flow from increased operations and increased accounts receivable payments will be sufficient to operate in the normal course of business for the next 12 months from the issuance date of these unaudited condensed financial statements. TIC received a $414,000 progress billing advance on the MADL program in January 2025 which will allow us to jump start MADL production. The impending commencement of MADL and CRAFT ECP test set deliveries are expected to sharply increase revenues and significantly improve gross margins.
Currently, the Company has no material future capital expenditure requirements.
Off-Balance Sheet Arrangements
As of December 31, 2024, the Company had no off-balance sheet arrangements.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
23
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item. We do not hold any derivative instruments and do not engage in any hedging activities.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective in providing reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s report on internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, a company’s principal executive and principal financial officer and effected by the our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| 1. | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; | |
| 2. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made in accordance with authorizations of management and directors of the company; and | |
| 3. | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible enhancements to controls and procedures.
Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2024, based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of December 31, 2024, because management identified that there was a lack of adherence to formal policies and procedures with inventory controls.
24
Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:
| ● | Management personnel, including our Chief Accounting Officer, are overseeing the financial reporting process and implementation of enhanced controls and governance; |
| ● | Formation of an internal task team to enhance weaknesses over inventory movement, valuation, and internal controls. |
Management is committed to maintaining a strong internal controls environment and implementing measures designed to help ensure that control deficiencies contributing to the material weakness are remediated as soon as possible. We have documented key procedures and controls using a risk-based approach and have, therefore, made progress toward remediation. We continue to implement our remediation plan, which includes continued engagement of an external financial consulting firm to enhance financial reporting and operations as well as design and implementation of controls. We will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and Management has concluded, through testing, that the controls are operating effectively.
(b) Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation referred to above that occurred during our last completed fiscal quarter that has materially negatively affected, or is reasonably likely to materially affect, our internal control over financial reporting. As discussed above, management has remediation plans that will be implemented during fiscal year 2025.
25
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years. No director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years. No director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, or banking activities during the past ten years. No director or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.
Item 1A. Risk Factors.
Not applicable because we are a smaller reporting company. Notwithstanding, we believe there are no changes that constitute material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the SEC on June 28, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of the Company’s equity securities during the quarter ended December 31, 2024.
Item 3. Defaults upon Senior Securities.
There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company during the quarter ending December 31, 2024.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
There
is
26
Item 6. Exhibits.
| * | Filed herewith |
27
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 13, 2025 | By: | /s/ Jeffrey C. O’Hara |
| Name: | Jeffrey C. O’Hara | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
|
| Date: February 13, 2025 | By: | /s/ Pauline Romeo |
| Name: | Pauline Romeo | |
| Title: | Chief Accounting Officer (Principal Financial and Accounting Officer) |
|
28
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey C. O’Hara, certify that:
| 1. | I have reviewed this Form 10-Q of Tel-Instrument Electronics Corp.; |
| 2. | Based on my knowledge, this 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 report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this 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 present in this report; |
| 4. | Along with the Principal Financial Officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 13, 2025 | By: | /s/ Jeffrey C. O’Hara |
| Jeffrey C. O’Hara | ||
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Pauline Romeo, certify that:
| 1. | I have reviewed this Form 10-Q of Tel-Instrument Electronics Corp.; |
| 2. | Based on my knowledge, this 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 report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this 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 present in this report; |
| 4. | Along with the Principal Executive Officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 13, 2025 | By: | /s/ Pauline Romeo |
| Pauline Romeo | ||
Chief Accounting Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Tel-Instrument Electronics Corp. (the “Company”), on Form 10-Q for the quarter ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Jeffrey C. O’Hara, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | Such Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in such Quarterly Report on Form 10-Q for the quarter ended December 31, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: February 13, 2025 | By: | /s/ Jeffrey C. O’Hara |
| Jeffrey C. O’Hara | ||
Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Tel-Instrument Electronics Corp. (the “Company”), on Form 10-Q for the quarter ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Pauline Romeo, Chief Accounting Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | Such Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in such Quarterly Report on Form 10-Q for the quarter ended December 31, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: February 13, 2025 | By: | /s/ Pauline Romeo |
| Pauline Romeo | ||
Chief Accounting Officer (Principal Financial and Accounting Officer) |
Condensed Consolidated Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Income Statement [Abstract] | ||||
| Net sales | $ 2,972,137 | $ 2,403,099 | $ 7,591,655 | $ 6,835,123 |
| Cost of sales | 2,337,736 | 1,434,981 | 6,004,412 | 4,212,971 |
| Gross margin | 634,401 | 968,118 | 1,587,243 | 2,622,152 |
| Operating expenses: | ||||
| Selling, general and administrative | 601,187 | 414,458 | 1,693,995 | 1,520,386 |
| Engineering, research, and development | 608,160 | 306,546 | 1,395,884 | 913,701 |
| Total operating expenses | 1,209,347 | 721,004 | 3,089,879 | 2,434,087 |
| (Loss) income from operations | (574,946) | 247,114 | (1,502,636) | 188,065 |
| Other income (expense): | ||||
| Interest income | 0 | 35 | 11 | 50,642 |
| Interest expense – judgement | 0 | 0 | 0 | (198,535) |
| Interest expense – other | (27,509) | (22,976) | (77,483) | (48,561) |
| Total other net income (expense) | (27,509) | (22,941) | (77,472) | (196,454) |
| (Loss) income before income taxes | (602,455) | 224,173 | (1,580,108) | (8,389) |
| Income tax (benefit) expense | (145,972) | 90,364 | (351,279) | (2,337) |
| Net (loss) income | (456,483) | 133,809 | (1,228,829) | (6,052) |
| Preferred dividends | (94,420) | (94,420) | (283,260) | (257,128) |
| Net (loss) income attributable to common shareholders | $ (550,903) | $ 39,389 | $ (1,512,089) | $ (263,180) |
| Basic net (loss) income per common share (in Dollars per share) | $ (0.17) | $ 0.01 | $ (0.46) | $ (0.08) |
| Diluted net (loss) income per common share (in Dollars per share) | $ (0.17) | $ 0.02 | $ (0.46) | $ (0.08) |
| Weighted average shares outstanding: | ||||
| Basic (in Shares) | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 |
| Diluted (in Shares) | 3,255,887 | 5,610,634 | 3,255,887 | 3,255,887 |
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) |
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
Preferred Stock [Member]
Series B Preferred Stock [Member]
|
Preferred Stock [Member]
Series C Preferred Stock [Member]
|
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Mar. 31, 2023 | $ 3,875,998 | $ 1,207,367 | $ 325,586 | $ 6,721,535 | $ (6,348,849) | $ 5,781,637 | |
| Balance (in Shares) at Mar. 31, 2023 | 500,000 | 166,667 | 3,255,887 | ||||
| 8% Dividends on Preferred Stock | $ 180,000 | $ 69,334 | $ 7,795 | (257,129) | 257,128 | ||
| Issuance of Series B and C Convertible Preferred Stock | $ 400,000 | $ 321,000 | 721,000 | ||||
| Issuance of Series B and C Convertible Preferred Stock (in Shares) | 66,667 | 53,500 | |||||
| Stock-based compensation | 7,156 | 7,156 | |||||
| Net income (loss) | (6,052) | (6,052) | |||||
| Balance at Dec. 31, 2023 | $ 4,055,998 | $ 1,676,701 | $ 328,795 | $ 325,586 | 6,471,562 | (6,354,901) | 6,503,741 |
| Balance (in Shares) at Dec. 31, 2023 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| Balance at Sep. 30, 2023 | $ 3,995,998 | $ 1,648,701 | $ 322,375 | $ 325,586 | 6,564,040 | (6,488,710) | 6,367,990 |
| Balance (in Shares) at Sep. 30, 2023 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| 8% Dividends on Preferred Stock | $ 60,000 | $ 28,000 | $ 6,420 | (94,420) | 94,420 | ||
| Stock-based compensation | 1,942 | 1,942 | |||||
| Net income (loss) | 133,809 | 133,809 | |||||
| Balance at Dec. 31, 2023 | $ 4,055,998 | $ 1,676,701 | $ 328,795 | $ 325,586 | 6,471,562 | (6,354,901) | 6,503,741 |
| Balance (in Shares) at Dec. 31, 2023 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| Balance at Mar. 31, 2024 | $ 4,115,998 | $ 1,704,701 | $ 335,215 | $ 325,586 | 6,379,085 | (6,006,958) | 6,853,627 |
| Balance (in Shares) at Mar. 31, 2024 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| 8% Dividends on Preferred Stock | $ 180,000 | $ 84,000 | $ 19,260 | (283,260) | 283,260 | ||
| Stock-based compensation | 16,477 | 16,477 | |||||
| Net income (loss) | (1,228,829) | (1,228,829) | |||||
| Balance at Dec. 31, 2024 | $ 4,295,998 | $ 1,788,701 | $ 354,475 | $ 325,586 | 6,112,302 | (7,235,787) | 5,641,275 |
| Balance (in Shares) at Dec. 31, 2024 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| Balance at Sep. 30, 2024 | $ 4,235,998 | $ 1,760,701 | $ 348,055 | $ 325,586 | 6,194,131 | (6,779,304) | 6,085,167 |
| Balance (in Shares) at Sep. 30, 2024 | 500,000 | 233,334 | 53,500 | 3,255,887 | |||
| 8% Dividends on Preferred Stock | $ 60,000 | $ 28,000 | $ 6,420 | (94,420) | 94,420 | ||
| Stock-based compensation | 12,591 | 12,591 | |||||
| Net income (loss) | (456,483) | (456,483) | |||||
| Balance at Dec. 31, 2024 | $ 4,295,998 | $ 1,788,701 | $ 354,475 | $ 325,586 | $ 6,112,302 | $ (7,235,787) | $ 5,641,275 |
| Balance (in Shares) at Dec. 31, 2024 | 500,000 | 233,334 | 53,500 | 3,255,887 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Additional Paid-in Capital [Member] | ||||
| Dividends on Preferred Stock | 8.00% | 8.00% | 8.00% | 8.00% |
Business, Organization and Liquidity |
9 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Accounting [Text Block] | Note 1 – Business, Organization and Liquidity
Business and Organization
Tel-Instrument Electronics Corp. (“Tel,” “TIC” or the “Company”) has been in business since 1947. The Company is a leading designer and manufacturer of avionics test and measurement instruments for the global, commercial air transport, general aviation, and government/military defense markets. Tel provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. The Company sells its equipment in both domestic and international markets. Tel continues to develop new products in anticipation of customers’ needs and to maintain its strong market position. Its development of multi-function testers has made it easier for customers to perform ramp tests with less operator training, fewer test sets, and lower product support costs. The Company has become a major manufacturer and supplier of Identification Friend or Foe (“IFF”) flight line test equipment over the last two decades.
The Company is publicly traded and was quoted on the Over-the-Counter Market Place (“OTCQB”) under the symbol “TIKK.”
Liquidity
On December 31, 2024, the Company had positive working capital of $2,663,404 as compared to working capital of $4,249,777 on March 31, 2024. This included $192,783 of cash on hand and $1,138,791 of accounts receivable.
The Company had a $8.4 million sales backlog on December 31, 2024.
On September 18, 2024, Bank of America renewed the line of credit for $1,000,000 with a maturity date of July 31, 2025. The line of credit was fully drawn upon on December 31, 2024.
During June 2024, the Company’s CEO provided short term advances totaling $105,500. During July 2024, an additional $40,000 was provided in short term advances of which $25,000 was repaid during July 2024, with a balance owed as of December 31, 2024 of $120,500. The maturity date for the principal balances was July 31, 2024 in the event the lender submitted a written demand for repayment. This event did not occur, and the interest continues to accrue on the principal until paid off in full at a per annum rate of 16%. As of December 31, 2024 the accrued interest was $10,089.
The Company believes it has sufficient cash on hand and expected cash flow from operations for the next twelve months due to the increase in business and the opportunities we have included in our projections. Revenues and profits are expected to improve significantly starting in the next fiscal year 2026 due to the success of our SDR-OMNI product and the commencement of CRAFT ECP and MADL production.
Based on the foregoing, we believe that our expected cash flows from operations, and fulfillment of our $8.4 million open orders will be sufficient to operate in the normal course of business for next 12 months from the issuance date of these unaudited condensed consolidated financial statements.
Currently, the Company has no material future capital expenditure requirements. |
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Significant Accounting Policies [Text Block] | Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Tel-Instrument Electronics Corp. as of December 31, 2024, the results of operations, change in stockholders’ equity and statements of cash flow for the nine months ended December 31, 2024 and December 31, 2023. These results are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated 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, 2024 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. Accordingly, the unaudited condensed consolidated 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, 2024, as filed with the United States Securities and Exchange Commission (the “SEC”) on June 28, 2024 (the “Annual Report”).
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation in the unaudited condensed consolidated statements of cash flow.
Revenue Recognition
Under Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company accounts for revenue recognition in accordance with ASC 606.The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The ASC 606 defines a five-step process to achieve the core principle and, in doing so, it is possible more judgement and estimates may be required within the revenue recognition process than are currently in use.
The Company generates revenue from designing, manufacturing, and selling avionic tests and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. The Company also offers calibration and repair services for a wide range of airborne navigation and communication equipment.
Nature of goods and services
The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each. Test Units/Sets
The Company develops and manufactures unit sets to test navigation and communication equipment, such as ramp testers and bench testers for equipment installed in aircraft and ground radios. The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract, which is usually at the time of shipment. Revenue on products is presented gross because the Company is primarily responsible for fulfilling the promise to provide the product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears the risk of loss while the inventory is in-transit. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to the customer. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
When determining the transaction price of a contract, an adjustment is made if payment from the customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2024.
Replacement Parts
The Company offers replacement parts for test equipment, ramp testers, and bench testers. Similar to the sale of test units, the control of the product transfers at a point of time and therefore, revenue is recognized at the point in time when the obligation to the customer has been fulfilled.
Extended Warranties
The extended warranties sold by the Company provide a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage with coverage terms ranging from 2 to 7 years. Amounts received for warranties are recorded as deferred revenue and recognized as revenue ratably over the respective term of the agreements. As of December 31, 2024, $134,178 is expected to be recognized from remaining performance obligations for extended warranties as compared to $179,422 at March 31, 2024. For the three and nine months ended December 31, 2024, the Company recognized revenue from extended warranties of $13,858 and $45,244, respectively, as compared to $30,261 and $96,847 of extended warranties from amounts that were included in Deferred Revenue for the three and nine months ended December 31, 2023, respectively.
The following table provides a summary of the changes in deferred revenues for the nine months ended December 31, 2024:
Other Deferred Revenues
The Company sometimes receives payments in advance of shipment. These amounts are classified as other deferred revenues. For the periods ended December 31, 2024, and March 31, 2024, the Company had other deferred revenues of $202,650 and $13,102, respectively. Repair and Calibration Services
The Company offers repair and calibration services for units that are returned for annual calibrations and/or for repairs after the warranty period has expired. The Company repairs and calibrates a wide range of airborne navigation and communication equipment. Revenue is recognized at the time the repaired or calibrated unit is shipped back to the customer, as it is at this time that the work is completed.
Other
The majority of the Company’s revenues are from contracts with the U.S. government, airlines, aircraft manufacturers, domestic distributors, international distributors for sales to military and commercial customers, and other commercial customers. The contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days, or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company’s contracts generally do not include a significant financing component. Payments received prior to the delivery of units or services performed are recorded as deferred revenues. The Company applied the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales. All sales are denominated in U.S. dollars. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. The Company chose to apply the available practical expedient as commission eligible sales orders are fulfilled within less than one year and commissions are generally paid by the Company within 30 days of the related sales order fulfillment.
Disaggregation of revenue
In the following tables, revenue is disaggregated by revenue category.
In the following table, revenue is disaggregated by geography.
For the three months ended December 31, 2024, four customers accounted for sales of $1,086,395 or 37%, $443,818 or 15%, $332,100 or 11% and $308,826 or 10%. For the nine months ended December 31, 2024, two customers accounted for sales of $2,704,278, or 36%, and $994,757 or 13%.
For the three months ended December 31, 2023, three customers accounted for sales of $715,635 or 30%, $437,499 or 18% and $243,718 or 10%. For the nine months ended December 31, 2023 one customer accounted for sales of $2,162,360, or 32%. The Company, in addition to inside sales efforts, utilizes independent sales agents to sell its products to customers. A related party independent sales agent earned $44,466 and $76,313 in commissions for the three and nine months ended December 31, 2024, respectively. The sales agent earned $9,000 and $27,000 for sales and marketing assistance for the three and nine months ended December 31, 2024.
The same related party independent sales agent earned $12,031 and $68,267 in commissions for the three and nine months ended December 31, 2023, respectively. The sales agent earned $9,000 and $27,000 for sales and marketing assistance for the three and nine months ended December 31, 2023.
New Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. We are currently evaluating this guidance to determine the impact it may have on our consolidated financial statements related disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The guidance will first be effective in our annual disclosures for the year ending March 31, 2026, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures.
No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements. |
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Accounts Receivable, net |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 3 – Accounts Receivable, net
The following table sets forth the components of accounts receivable:
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Inventories, net |
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| Inventory Disclosure [Text Block] | Note 4 – Inventories, net
Inventories consist of:
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| Other Current Assets [Text Block] | Note 5 – Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of:
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Equipment and Leasehold Improvements |
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| Property, Plant and Equipment Disclosure [Text Block] | Note 6 – Equipment and Leasehold Improvements
Equipment and leasehold improvements consist of the following:
Depreciation and amortization expense related to the assets above for the three months and nine months ended December 31, 2024 was $7,491 and $25,356, respectively. Depreciation and amortization expense for the three and nine months ended December 31, 2023 was $7,016 and $35,522, respectively. |
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Line of Credit |
9 Months Ended |
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Dec. 31, 2024 | |
| Debt Disclosure [Abstract] | |
| Debt Disclosure [Text Block] | Note 7 – Line of Credit
The Company has a line of credit with Bank of America with open availability up to $1,000,000 as of December 31, 2024, with monthly payments of interest only. The borrowing base calculation is tied to accounts receivable collateralized by substantially all of the assets of the Company.
As of December 31, 2024, and March 31, 2024, the outstanding balances were $1,000,000 and $690,000, respectively. The interest rate on December 31, 2024 was 8.55%.
On April 1, 2024 Bank of America extended the Company line of credit with a maturity date of July 31, 2024, in addition the line of credit cash limit amount was increased from $690,000 to $1,000,000. The Company line of credit was renewed by Bank of America, with a maturity of July 31, 2025. Under the amendment, interest on any outstanding balance is payable monthly at an annual interest rate equal to the Bank’s Prime Rate plus 1.05 percentage points and no less than 3.25%. The “Prime Rate” is the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank’s costs and desired return, general economic conditions, and other factors, and is used as a reference point for pricing loans. |
Right of Use Assets and Operating Lease Liability |
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| Lessee, Operating Leases [Text Block] | Note 8 – Right of Use Assets and Operating Lease Liability
The Company leases its facility in East Rutherford, NJ with monthly payments of $21,237 until August 2025. Thereafter, monthly payments are $23,083 for the balance of the 8 year lease agreement expiring August 2029.
The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company estimated its incremental borrowing rate based on its credit quality, line of credit agreement and by comparing interest rates available in the market for similar borrowings. The Company used a discount rate of 3.90% for both December 31, 2024 and March 31, 2024. The weighted average remaining lease term is 4.67 years.
Right to use assets is summarized below:
The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total lease liabilities recognized on the unaudited condensed consolidated balance sheet as of December 31, 2024:
Total rent expense for the three and nine months ended December 31, 2024 was $102,765 and $308,210, respectively, as compared to $102,900 and $308,634 for the three months and nine months ended December 31, 2023 respectively. |
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Stock Options Plans |
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| Share-Based Payment Arrangement [Text Block] | Note 9 – Stock Options Plans
The Board of Directors (the “Board”) adopted on January 18, 2017, and ratified by the shareholders at the Annual Meeting on January 18, 2017, the Company’s 2016 Stock Option Plan (the “Plan”). The Plan provides for the granting of incentive stock options, by a committee to be appointed by the Board (both the Board and the Committee are referred to herein as the “Committee”) to directors, officers, and employees (excluding directors and officers who are not employees) to purchase shares of the Common Stock of the Company, par value $0.10 per share (the “Stock”), in accordance with the terms and provisions. The 2016 Plan reserves for issuance, options to purchase up to 250,000 shares of its common stock. Options granted under the plan are exercisable up to a period of five years from the date of grant at an exercise 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, as to which the exercise price must be not less than 110% of the fair market value of the common stock at the date of grant. Options are exercisable on a cumulative basis, 20% at or after each of the first, second, and third anniversary of the grant and 40% after the fourth year anniversary.
The Company accounts for stock-based compensation in accordance with FASB ASC 718 which requires the measurement of stock-based compensation based on the fair value of the award on the date of grant. The Company recognizes compensation cost on awards on a straight-line basis over the vesting period, typically four years. The Company estimates the fair value of each option granted using the Black-Scholes option-pricing model.
The fair value of each option awarded is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of Common Stock. The expected life of the options granted represents the period of time from date of grant to expiration (5 years). The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. The Company granted 160,000 stock options during the period ended December 31, 2024. The per share weighted-average fair value of stock options granted for the period ended December 31, 2024 was $1.36 on the date of grant using the Black Scholes option-pricing model with the following assumptions:
There were no options granted in the prior fiscal year.
A summary of the status of the Company’s stock option plans for the fiscal year ended March 31, 2024, and year to date December 31, 2024, and changes during the year are presented below (in number of options):
Remaining options available for grant were 59,500 as of December 31, 2024.
At December 31, 2024, the unamortized compensation expense for stock options was $156,287. Unamortized compensation expense is expected to be recognized over a weighted-average period of approximately 2.6 years.
For the three months ended December 31, 2024, the Company recorded stock compensation costs of $12,591, as compared to $1,942 for the three months ended December 31, 2023. For the nine months ended December 31, 2024, the Company recorded stock compensation costs of $16,477 as compared to $7,156 for the nine months ended December 31, 2023. |
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Income Taxes |
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Dec. 31, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Tax Disclosure [Text Block] | Note 10 – Income Taxes
FASB ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”) prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company does not have any unrecognized tax benefits.
The tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities, gave rise to the Company’s deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. The Company had approximately $2.8 million in deferred tax assets at December 31, 2024 and approximately $2.5 million in deferred tax assets at March 31, 2024. The Company recognizes the impact of an uncertain income tax position taken on its income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. |
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| Earnings Per Share [Text Block] | Note 11 – Net Income (Loss) per Share
Net income (loss) per share has been computed according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 260”), “Earnings per Share,” which requires a dual presentation of basic and diluted income per share (“EPS”). Basic EPS represents net income (loss) divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS to common stockholders reflects the potential dilution that could occur if securities, including preferred stock and options, were converted into common stock. The dilutive effect of outstanding options is reflected in earnings per share by use of the treasury stock method. The dilutive effect of preferred stock is reflected in earnings per share by use of the if-converted method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise and the amounts of average unrecognized compensation. For the three and nine months ended December 31, 2024 and nine months ended December 2023, since the Company has a net loss attributable to common shareholders, the effect of common stock equivalents is anti-dilutive, and as such, common stock equivalents have been excluded from this calculation.
The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share for the three months ended:
The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share for the nine months ended:
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting Disclosure [Text Block] | Note 12 – Segment Information
In accordance with FASB ASC 280, “Disclosures about Segments of an Enterprise and related information”, the Company determined it has two reportable segments - avionics government and avionics commercial. There are no inter-segment revenues.
The Company is organized primarily on the basis of its avionics products. The avionics government segment consists primarily of the design, manufacture, and sale of test equipment to the U.S. and foreign governments and militaries either directly or through distributors. The avionics commercial segment consists of design, manufacture, and sale of test equipment to domestic and foreign airlines, directly or through commercial distributors, and to general aviation repair and maintenance shops. The Company develops and designs test equipment for the avionics industry and as such, the Company’s products and designs cross segments.
Management evaluates the performance of its segments and allocates resources to them based on gross margin. The Company’s general and administrative costs and sales and marketing expenses, and engineering costs are not segment specific. As a result, all operating 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.
The tables below present information about reportable segments within the avionics business for the three and nine months ended December 31, 2024, and 2023:
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Pay vs Performance Disclosure - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Dec. 31, 2024 |
Dec. 31, 2023 |
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| Pay vs Performance Disclosure | ||||
| Net Income (Loss) | $ (456,483) | $ 133,809 | $ (1,228,829) | $ (6,052) |
Insider Trading Arrangements |
3 Months Ended |
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Dec. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies, by Policy (Policies) |
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| Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Tel-Instrument Electronics Corp. as of December 31, 2024, the results of operations, change in stockholders’ equity and statements of cash flow for the nine months ended December 31, 2024 and December 31, 2023. These results are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated 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, 2024 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. Accordingly, the unaudited condensed consolidated 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, 2024, as filed with the United States Securities and Exchange Commission (the “SEC”) on June 28, 2024 (the “Annual Report”). |
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| Reclassification, Comparability Adjustment [Policy Text Block] | Reclassifications Certain prior period amounts have been reclassified to conform with the current period presentation in the unaudited condensed consolidated statements of cash flow. |
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| Revenue [Policy Text Block] | Revenue Recognition Under Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company accounts for revenue recognition in accordance with ASC 606.The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The ASC 606 defines a five-step process to achieve the core principle and, in doing so, it is possible more judgement and estimates may be required within the revenue recognition process than are currently in use. The Company generates revenue from designing, manufacturing, and selling avionic tests and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. The Company also offers calibration and repair services for a wide range of airborne navigation and communication equipment. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each. Test Units/Sets The Company develops and manufactures unit sets to test navigation and communication equipment, such as ramp testers and bench testers for equipment installed in aircraft and ground radios. The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract, which is usually at the time of shipment. Revenue on products is presented gross because the Company is primarily responsible for fulfilling the promise to provide the product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears the risk of loss while the inventory is in-transit. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to the customer. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. When determining the transaction price of a contract, an adjustment is made if payment from the customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2024. Replacement Parts The Company offers replacement parts for test equipment, ramp testers, and bench testers. Similar to the sale of test units, the control of the product transfers at a point of time and therefore, revenue is recognized at the point in time when the obligation to the customer has been fulfilled. Extended Warranties The extended warranties sold by the Company provide a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage with coverage terms ranging from 2 to 7 years. Amounts received for warranties are recorded as deferred revenue and recognized as revenue ratably over the respective term of the agreements. As of December 31, 2024, $134,178 is expected to be recognized from remaining performance obligations for extended warranties as compared to $179,422 at March 31, 2024. For the three and nine months ended December 31, 2024, the Company recognized revenue from extended warranties of $13,858 and $45,244, respectively, as compared to $30,261 and $96,847 of extended warranties from amounts that were included in Deferred Revenue for the three and nine months ended December 31, 2023, respectively. The following table provides a summary of the changes in deferred revenues for the nine months ended December 31, 2024:
Other Deferred Revenues The Company sometimes receives payments in advance of shipment. These amounts are classified as other deferred revenues. For the periods ended December 31, 2024, and March 31, 2024, the Company had other deferred revenues of $202,650 and $13,102, respectively. Repair and Calibration Services The Company offers repair and calibration services for units that are returned for annual calibrations and/or for repairs after the warranty period has expired. The Company repairs and calibrates a wide range of airborne navigation and communication equipment. Revenue is recognized at the time the repaired or calibrated unit is shipped back to the customer, as it is at this time that the work is completed. Other The majority of the Company’s revenues are from contracts with the U.S. government, airlines, aircraft manufacturers, domestic distributors, international distributors for sales to military and commercial customers, and other commercial customers. The contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days, or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company’s contracts generally do not include a significant financing component. Payments received prior to the delivery of units or services performed are recorded as deferred revenues. The Company applied the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales. All sales are denominated in U.S. dollars. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. The Company chose to apply the available practical expedient as commission eligible sales orders are fulfilled within less than one year and commissions are generally paid by the Company within 30 days of the related sales order fulfillment. Disaggregation of revenue In the following tables, revenue is disaggregated by revenue category.
In the following table, revenue is disaggregated by geography.
For the three months ended December 31, 2024, four customers accounted for sales of $1,086,395 or 37%, $443,818 or 15%, $332,100 or 11% and $308,826 or 10%. For the nine months ended December 31, 2024, two customers accounted for sales of $2,704,278, or 36%, and $994,757 or 13%. For the three months ended December 31, 2023, three customers accounted for sales of $715,635 or 30%, $437,499 or 18% and $243,718 or 10%. For the nine months ended December 31, 2023 one customer accounted for sales of $2,162,360, or 32%. The Company, in addition to inside sales efforts, utilizes independent sales agents to sell its products to customers. A related party independent sales agent earned $44,466 and $76,313 in commissions for the three and nine months ended December 31, 2024, respectively. The sales agent earned $9,000 and $27,000 for sales and marketing assistance for the three and nine months ended December 31, 2024. The same related party independent sales agent earned $12,031 and $68,267 in commissions for the three and nine months ended December 31, 2023, respectively. The sales agent earned $9,000 and $27,000 for sales and marketing assistance for the three and nine months ended December 31, 2023. |
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| New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. We are currently evaluating this guidance to determine the impact it may have on our consolidated financial statements related disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The guidance will first be effective in our annual disclosures for the year ending March 31, 2026, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures. No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements. |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | The following table provides a summary of the changes in deferred revenues for the nine months ended December 31, 2024:
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| Disaggregation of Revenue [Table Text Block] | In the following tables, revenue is disaggregated by revenue category.
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| Revenue from External Customers by Geographic Areas [Table Text Block] | In the following table, revenue is disaggregated by geography.
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| Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The following table sets forth the components of accounts receivable:
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventory, Current [Table Text Block] | Inventories consist of:
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Prepaid expenses and other current assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Prepaid expenses and other current assets consist of:
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Equipment and Leasehold Improvements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Table Text Block] | Equipment and leasehold improvements consist of the following:
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Right of Use Assets and Operating Lease Liability (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease, Cost [Table Text Block] | Right to use assets is summarized below:
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| Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block] | The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total lease liabilities recognized on the unaudited condensed consolidated balance sheet as of December 31, 2024:
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Stock Options Plans (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair value of each option awarded is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of Common Stock. The expected life of the options granted represents the period of time from date of grant to expiration (5 years). The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. The Company granted 160,000 stock options during the period ended December 31, 2024. The per share weighted-average fair value of stock options granted for the period ended December 31, 2024 was $1.36 on the date of grant using the Black Scholes option-pricing model with the following assumptions:
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| Share-Based Payment Arrangement, Option, Activity [Table Text Block] | A summary of the status of the Company’s stock option plans for the fiscal year ended March 31, 2024, and year to date December 31, 2024, and changes during the year are presented below (in number of options):
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Net Income (Loss) per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Net income (loss) per share has been computed according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 260”), “Earnings per Share,” which requires a dual presentation of basic and diluted income per share (“EPS”). Basic EPS represents net income (loss) divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS to common stockholders reflects the potential dilution that could occur if securities, including preferred stock and options, were converted into common stock. The dilutive effect of outstanding options is reflected in earnings per share by use of the treasury stock method. The dilutive effect of preferred stock is reflected in earnings per share by use of the if-converted method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise and the amounts of average unrecognized compensation. For the three and nine months ended December 31, 2024 and nine months ended December 2023, since the Company has a net loss attributable to common shareholders, the effect of common stock equivalents is anti-dilutive, and as such, common stock equivalents have been excluded from this calculation.
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The
following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share
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Segment Information (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information, by Segment [Table Text Block] | The tables below present information about reportable segments within the avionics business for the three and nine months ended December 31, 2024, and 2023:
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Business, Organization and Liquidity (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jul. 31, 2024 |
Jun. 30, 2024 |
Dec. 31, 2024 |
Sep. 18, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
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| Business, Organization and Liquidity (Details) [Line Items] | |||||||
| Working Capital | $ 2,663,404 | $ 4,249,777 | |||||
| Cash and Cash Equivalents, at Carrying Value | 192,783 | $ 132,013 | $ 220,791 | $ 3,839,398 | |||
| Accounts Receivable, after Allowance for Credit Loss | 1,138,791 | ||||||
| Backlog | $ 8,400,000 | ||||||
| Debt Instrument, Interest Rate During Period | 16.00% | ||||||
| Debt Instrument, Increase, Accrued Interest | $ 10,089 | ||||||
| Chief Executive Officer [Member] | |||||||
| Business, Organization and Liquidity (Details) [Line Items] | |||||||
| Proceeds from Short-Term Debt | $ 40,000 | $ 105,500 | |||||
| Repayments of Short-Term Debt | $ 25,000 | ||||||
| Short-Term Debt | $ 120,500 | ||||||
| Letter of Credit [Member] | |||||||
| Business, Organization and Liquidity (Details) [Line Items] | |||||||
| Line of Credit Facility, Current Borrowing Capacity | $ 1,000,000 | ||||||
Summary of Significant Accounting Policies - Deferred Revenue, by Arrangement, Disclosure (Details) |
9 Months Ended |
|---|---|
|
Dec. 31, 2024
USD ($)
| |
| Deferred Revenue By Arrangement Disclosure Abstract | |
| Deferred revenues related to extended warrants | $ 179,422 |
| Revenue recognized | (45,244) |
| Deferred revenues related to extended warrants | $ 134,178 |
Summary of Significant Accounting Policies - Revenue from External Customers by Geographic Areas (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
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| Geography | ||||
| Revenues | $ 2,972,137 | $ 2,403,099 | $ 7,591,655 | $ 6,835,123 |
| UNITED STATES | ||||
| Geography | ||||
| Revenues | 2,567,439 | 2,227,999 | 6,571,514 | 5,894,617 |
| INTERNATIONAL | ||||
| Geography | ||||
| Revenues | $ 404,698 | $ 175,100 | $ 1,020,141 | $ 940,506 |
Accounts Receivable, net - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Less: Allowance for credit losses | $ (8,570) | $ (8,570) |
| Total | 1,138,791 | 1,110,548 |
| Government Receivables [Member] | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts Receivable | 515,252 | 933,249 |
| Commercial Receivables [Member] | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts Receivable | $ 632,109 | $ 185,869 |
Inventories, net - Schedule of Inventory, Current (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Schedule Of Inventory Current Abstract | ||
| Purchased parts | $ 2,783,961 | $ 2,835,120 |
| Work-in-process | 1,586,116 | 2,912,737 |
| Finished Goods | 26,904 | 48,630 |
| Less: Inventory reserve | (388,969) | (384,843) |
| Inventory, net | $ 4,008,012 | $ 5,411,644 |
Prepaid expenses and other current assets - Deferred Costs, Capitalized, Prepaid, and Other Assets (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Deferred Costs Capitalized Prepaid And Other Assets Abstract | ||
| Prepaid expenses | $ 156,829 | $ 186,231 |
| Deferred charges | 27,719 | 27,719 |
| Other receivables | 10,000 | 211 |
| Prepaid expenses and other current assets | $ 194,548 | $ 214,161 |
Equipment and Leasehold Improvements (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation, Depletion and Amortization | $ 7,491 | $ 7,016 | $ 25,356 | $ 35,522 |
Equipment and Leasehold Improvements - Property, Plant and Equipment (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Less: Accumulated depreciation & amortization | $ (3,262,913) | $ (3,237,557) |
| Property and equipment, net | 47,839 | 73,195 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 127,655 | 127,655 |
| Machinery and Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 1,931,831 | 1,931,831 |
| Automobiles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 23,712 | 23,712 |
| Office Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 590,365 | 590,365 |
| Assets Held under Capital Leases [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 637,189 | $ 637,189 |
Line of Credit (Details) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Apr. 01, 2024 |
Mar. 31, 2024 |
|
| Line of Credit (Details) [Line Items] | |||
| Long-Term Line of Credit | $ 1,000,000 | $ 690,000 | |
| Line of Credit [Member] | |||
| Line of Credit (Details) [Line Items] | |||
| Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | ||
| Line of Credit Facility, Collateral | collateralized by substantially all of the assets of the Company. | ||
| Long-Term Line of Credit | $ 690,000 | ||
| Line of Credit Facility, Interest Rate at Period End | 8.55% | ||
| Line of Credit Facility, Interest Rate Description | Prime Rate plus 1.05 percentage points and no less than 3.25%. | ||
| Maximum [Member] | |||
| Line of Credit (Details) [Line Items] | |||
| Long-Term Line of Credit | $ 1,000,000 |
Right of Use Assets and Operating Lease Liability (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2024 |
|
| Right of Use Assets and Operating Lease Liability (Details) [Line Items] | |||||
| Operating Lease, Expense | $ 102,765 | $ 102,900 | $ 308,210 | $ 308,634 | |
| Operating Lease, Weighted Average Remaining Lease Term | 4 years 8 months 1 day | 4 years 8 months 1 day | |||
| Building [Member] | |||||
| Right of Use Assets and Operating Lease Liability (Details) [Line Items] | |||||
| Operating Lease, Expense | $ 21,237 | ||||
| Lessee, Operating Lease, Discount Rate | 3.90% | 3.90% | 3.90% | ||
| Monthly Payments September 2025 [Member] | Minimum [Member] | Building [Member] | |||||
| Right of Use Assets and Operating Lease Liability (Details) [Line Items] | |||||
| Operating Lease, Expense | $ 23,083 | ||||
| Monthly Payments September 2021 [Member] | Minimum [Member] | Building [Member] | |||||
| Right of Use Assets and Operating Lease Liability (Details) [Line Items] | |||||
| Lessee, Operating Lease, Renewal Term | 8 years | 8 years | |||
Right of Use Assets and Operating Lease Liability - Lease, Cost (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Lease, Cost [Abstract] | ||
| Right to use asset | $ 1,830,857 | $ 1,830,857 |
| Less: Accumulated amortization | (663,207) | (506,394) |
| Right to use assets, net | $ 1,167,650 | $ 1,324,463 |
Right of Use Assets and Operating Lease Liability - Lessee, Operating Lease, Liability, Maturity (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Lessee Operating Lease Liability Maturity Abstract | ||
| Remaining payments in fiscal 2025 | $ 63,710 | |
| 2026 | 267,767 | |
| 2027 | 277,000 | |
| 2028 | 277,000 | |
| 2029 | 277,000 | |
| Thereafter | 115,416 | |
| Total undiscounted future minimum lease payments | 1,277,893 | |
| Less: Difference between undiscounted lease payments and discounted lease liabilities | (110,243) | |
| Present value of net minimum lease payments | 1,167,650 | |
| Less current portion | (208,076) | $ (210,111) |
| Operating lease liabilities – long-term | $ 959,574 | $ 1,114,352 |
Stock Options Plans - Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions (Details) |
9 Months Ended |
|---|---|
|
Dec. 31, 2024
USD ($)
| |
| Schedule Of Share Based Payment Award Stock Options Valuation Assumptions Abstract | |
| Dividend Yield (in Dollars) | $ 0 |
| Risk-free Interest rate | 3.73% |
| Volatility | 66.79% |
| Life | 5 years |
Income Taxes (Details) - USD ($) |
Dec. 31, 2024 |
Mar. 31, 2024 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Deferred Income Tax Assets, Net | $ 2,801,936 | $ 2,450,657 |
Net Income (Loss) per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Basic net (loss) income per share computation: | ||||
| Net (loss) income | $ (456,483) | $ 133,809 | $ (1,228,829) | $ (6,052) |
| Less: Preferred dividends | (94,420) | (94,420) | (283,260) | (257,128) |
| Net (loss) income attributable to common shareholders | (550,903) | 39,389 | (1,512,089) | (263,180) |
| Add: Preferred dividends | 94,420 | |||
| Diluted net (loss) income attributable to common shareholders | $ (550,903) | $ 133,809 | $ (1,512,089) | $ (263,180) |
| Weighted-average common shares outstanding (in Shares) | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 |
| Incremental shares attributable to the assumed conversion of preferred stock (in Shares) | 2,354,747 | |||
| Total adjusted weighted-average shares (in Shares) | 3,255,887 | 5,610,634 | 3,255,887 | 3,255,887 |
| Diluted net (loss) income per share (in Dollars per share) | $ (0.17) | $ 0.02 | $ (0.46) | $ (0.08) |
| Basic net (loss) income per share (in Dollars per share) | $ (0.17) | $ 0.01 | $ (0.46) | $ (0.08) |
Net Income (Loss) per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,928,029 | 99,000 | 2,928,029 | 2,453,747 |
| Convertible Preferred Stock [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,737,529 | 2,737,529 | 2,354,747 | |
| Share-Based Payment Arrangement, Option [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 190,500 | 99,000 | 190,500 | 99,000 |
Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Segment Reporting Information [Line Items] | ||||
| Net sales | $ 2,972,137 | $ 2,403,099 | $ 7,591,655 | $ 6,835,123 |
| Cost of sales | 2,337,736 | 1,434,981 | 6,004,412 | 4,212,971 |
| Gross margin | 634,401 | 968,118 | 1,587,243 | 2,622,152 |
| Total expenses | 1,236,856 | 743,945 | 3,167,351 | 2,630,541 |
| Income (loss) before income taxes | (602,455) | 224,173 | (1,580,108) | (8,389) |
| Avionics Government [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net sales | 2,236,189 | 2,025,707 | 5,827,518 | 5,111,945 |
| Cost of sales | 1,760,802 | 1,099,256 | 4,590,179 | 2,858,652 |
| Gross margin | 475,387 | 926,451 | 1,237,339 | 2,253,293 |
| Avionics Commercial [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net sales | 735,948 | 377,392 | 1,764,137 | 1,723,178 |
| Cost of sales | 576,934 | 335,725 | 1,414,233 | 1,354,319 |
| Gross margin | 159,014 | 41,667 | 349,904 | 368,859 |
| Avionics Total [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net sales | 2,972,137 | 2,403,099 | 7,591,655 | 6,835,123 |
| Cost of sales | 2,337,736 | 1,434,981 | 6,004,412 | 4,212,971 |
| Gross margin | 634,401 | 968,118 | 1,587,243 | 2,622,152 |
| Total expenses | 880,416 | 469,649 | 2,065,274 | 1,461,598 |
| Income (loss) before income taxes | (246,015) | 498,469 | (478,031) | 1,160,554 |
| Corporate Segment [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net sales | 0 | 0 | 0 | 0 |
| Cost of sales | 0 | 0 | 0 | 0 |
| Gross margin | 0 | 0 | 0 | 0 |
| Total expenses | 356,440 | 274,296 | 1,102,077 | 1,168,943 |
| Income (loss) before income taxes | $ (356,440) | $ (274,296) | $ (1,102,077) | $ (1,168,943) |