----

|   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR |
|--------|--------------------------------------------|

|   |  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|----------------------------------------------------|

----

|   | PAGE |
|--------|------|

----

| TEL-INSTRUMENT ELECTRONICS CORPORATION                                                                                                                                                                                                                                                   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                                                                    |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                     |   | September 30, 2010 |   |   | March 31,2010 |   |
|                                                                                                                                                                                                                                                                                     |   | (unaudited) |   |   |   |   |
| ASSETS                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |
| Current assets:                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                                                                                                                                                              |   | $ | 488,306 |   |   | $ | 173,048 |   |
| Accounts receivable, net                                                                                                                                                                                                                                                                 |   |   | 2,031,624 |   |   |   | 939,143 |   |
| Unbilled government receivables                                                                                                                                                                                                                                                          |   |   | 1,491,111 |   |   |   | 1,491,111 |   |
| Inventories, net                                                                                                                                                                                                                                                                         |   |   | 3,411,764 |   |   |   | 2,242,227 |   |
| Prepaid expenses and other                                                                                                                                                                                                                                                               |   |   | 82,759 |   |   |   | 87,535 |   |
| Deferred debt expense                                                                                                                                                                                                                                                                    |   |   | 108,320 |   |   |   | - |   |
| Deferred income tax asset                                                                                                                                                                                                                                                                |   |   | 1,479,076 |   |   |   | 1,234,788 |   |
| Total current assets                                                                                                                                                                                                                                                                     |   |   | 9,092,960 |   |   |   | 6,167,852 |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Equipment and leasehold improvements, net                                                                                                                                                                                                                                                |   |   | 341,106 |   |   |   | 336,131 |   |
| Deferred income tax asset – non-current                                                                                                                                                                                                                                            |   |   | 1,176,223 |   |   |   | 1,176,223 |   |
| Deferred debt expense – long-term                                                                                                                                                                                                                                                  |   |   | 427,266 |   |   |   | - |   |
| Other assets                                                                                                                                                                                                                                                                             |   |   | 45,829 |   |   |   | 54,131 |   |
| Total assets                                                                                                                                                                                                                                                                             |   | $ | 11,083,384 |   |   | $ | 7,734,337 |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| LIABILITIES & STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Line of credit                                                                                                                                                                                                                                                                           |   |   | - |   |   |   | 600,000 |   |
| Current portion of long-term debt                                                                                                                                                                                                                                                        |   |   | 39,405 |   |   |   |   |   |
| Subordinated notes payable-related parties, net of debt discount                                                                                                                                                                                                                         |   |   | 238,461 |   |   |   | 226,923 |   |
| Accounts payable                                                                                                                                                                                                                                                                         |   |   | 1,934,063 |   |   |   | 1,145,572 |   |
| Progress Billings                                                                                                                                                                                                                                                                        |   |   | 515,502 |   |   |   | 69,412 |   |
| Deferred revenues                                                                                                                                                                                                                                                                        |   |   | 29,755 |   |   |   | 50,279 |   |
| Accrued payroll, vacation pay and payroll taxes                                                                                                                                                                                                                                          |   |   | 566,312 |   |   |   | 420,572 |   |
| Accrued expenses                                                                                                                                                                                                                                                                         |   |   | 1,656,775 |   |   |   | 1,335,506 |   |
| Total current liabilities                                                                                                                                                                                                                                                                |   |   | 4,980,273 |   |   |   | 3,848,264 |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Long-term debt, net of debt discount                                                                                                                                                                                                                                                     |   |   | 2,195,723 |   |   |   | - |   |
| Warranty liability                                                                                                                                                                                                                                                                       |   |   | 281,656 |   |   |   | - |   |
| Deferred revenues                                                                                                                                                                                                                                                                        |   |   | 22,069 |   |   |   | 27,957 |   |
| Total liabilities                                                                                                                                                                                                                                                                        |   |   | 7,479,721 |   |   |   | 3,876,221 |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Commitments                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|    Common stock, par value $.10 per share, 2,625,323 and          2,615,361 issued and outstanding as of September 30,          2010 and March 31, 2010, respectively |   |   |   262,532 |   |   |   |   261,536 |   |
|    Additional paid-in capital                                                                                                                                                                                                                                             |   |   | 5,589,048 |   |   |   | 5,481,091 |   |
|    Accumulated deficit                                                                                                                                                                                                                                                    |   |   | (2,247,917 | ) |   |   | (1,884,511 | ) |
| Total stockholders' equity                                                                                                                                                                                                                                                               |   |   | 3,603,663 |   |   |   | 3,858,116 |   |
| Total liabilities and stockholders' equity                                                                                                                                                                                                                                               |   | $ | 11,083,384 |   |   | $ | 7,734,337 |   |
|  See accompanying notes to condensed consolidated financial      Statements                                                                                                                                                                           |   |   |   |   |   |   |   |   |

----

|                                                                                                                TEL-INSTRUMENT ELECTRONICS CORPORATION |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                             |   |
|                                            (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |

|                                                                  |   | Three Months Ended  |          |   | Six Months Ended   |   |
|-----------------------------------------------------------------------|--------|---------------------|---------------|--------|--------------------|--------|
|                                                                  |   | September 30, 20100 |          |   | September 30, 2009 |   |   | September 30, 2010 |   |   | September 30, 2009 |   |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |
| Net sales                                                             |   | $                   | 3,055,933     |   |               | $      | 2,411,111 |   |   | $ | 5,511,213 |   |   | $ | 4,753,310 |   |
| Cost of sales                                                         |   |                | 1,586,698     |   |               |   | 1,163,459 |   |   |   | 2,959,598 |   |   |   | 2,427,196 |   |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                                                          |   |                | 1,469,235     |   |               |   | 1,247,652 |   |   |   | 2,551,615 |   |   |   | 2,326,114 |   |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                   |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
|   Selling, general and administrative                       |   |                | 692,631       |   |               |   | 710,809 |   |   |   | 1,450,675 |   |   |   | 1,518,206 |   |
|   Engineering, research and development                     |   |                | 861,090       |   |               |   | 827,552 |   |   |   | 1,618,436 |   |   |   | 1,772,164 |   |
| Total operating expenses                                              |   |                | 1,553,721     |   |               |   | 1,538,361 |   |   |   | 3,069,111 |   |   |   | 3,290,370 |   |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                  |   |                | (84,486       | )      |               |   | (290,709 | ) |   |   | (517,496 | ) |   |   | (964,256 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                               |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
|   Amortization of debt discount                             |   |                | (8,745        | )      |               |   | - |   |   |   | (14,514 | ) |   |   | - |   |
|   Amortization of debt expense                              |   |                | (6,018        | )      |               |   | - |   |   |   | (6,018 | ) |   |   | - |   |
|   Gain on sale of capital asset                             |   |                | -             |   |               |   | - |   |   |   | 3,600 |   |   |   | - |   |
|   Interest income                                           |   |                | 101           |   |               |   | 123 |   |   |   | 148 |   |   |   | 493 |   |
|   Interest expense                                          |   |                |  (47,194 | )      |               |   |  (11,525 | ) |   |   |  (70,699 | ) |   |   |  (18,996 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                                              |   |                | (146,342      | )      |               |   | (302,111 | ) |   |   | (604,979 | ) |   |   | (982,759 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                    |   |                | (58,348       | )      |               |   | (120,693 | ) |   |   | (241,573 | ) |   |   | (392,610 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                              |   |                | (87,994       | )      |               |   | (181,418 | ) |   |   | (363,406 | ) |   |   | (590,149 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
|    Basic and diluted loss per common share             |   | $                   | (0.03         | )      |               | $      | (0.07 | ) |   | $ | (0.14 | ) |   | $ | (0.24 | ) |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding:                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
|    Basic and diluted                                   |   |                | 2,622,415     |   |               |   | 2,504,794 |   |   |   | 2,619,038 |   |   |   | 2,491,848 |   |
|                                                                  |   |                |          |   |               |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to condensed consolidated financial statements |   |                |          |   |               |   |   |   |   |

----

| TEL-INSTRUMENT ELECTRONICS CORPORATION          |
|-------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited)                                     |

|                                                                                                                              |   | Six Months ended  |          |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------------|
|                                                                                                                              |   | September 30,2010 |          |   | September 30,2009 |   |
| Cash flows from operating activities:                                                                                             |   |              |          |   |   |   |
| Net loss                                                                                                                          |   | $                 | (363,406      | ) |   | $ | (590,149 | ) |
| Adjustments to reconcile net loss to net    cash used in operating activities:                                |   |              |          |   |   |   |   |   |
|        Deferred income taxes                                                                   |   |              | (244,288      | ) |   |   | (396,383 | ) |
|        Depreciation and amortization                                                           |   |              | 109,447       |   |   |   | 90,580 |   |
|        Gain on sale of asset                                                                   |   |              | (3,600        | ) |   |   |   |   |
|        Non-cash stock-based compensation                                                       |   |              | 49,028        |   |   |   | 36,149 |   |
|                                                                                                                              |   |              |          |   |   |   |   |   |
| Changes in assets and liabilities:                                                                                                |   |              |          |   |   |   |   |   |
|     (Increase) decrease in accounts receivable, net                                                           |   |              | (1,092,481    | ) |   |   | 2,674 |   |
|     Increase in unbilled government receivables                                                               |   |              | -             |   |   |   | (175,730 | ) |
|     (Increase) decrease in inventories                                                                        |   |              | (1,169,537    | ) |   |   | 543,854 |   |
|     Decrease in prepaid expenses & other                                                                  |   |              | 4,776         |   |   |   | 18,870 |   |
|     Decrease in other assets                                                                                  |   |              | 8,302         |   |   |   | 1,497 |   |
|     Increase (decrease) increase in accounts payable                                                          |   |              | 788,491       |   |   |   | (8,334 | ) |
|     Increase (decrease) in accrued payroll, vacation pay      and payroll taxes |   |              |  145,740 |   |   |   | (8,695 | ) |
|     Decrease in deferred revenues                                                                             |   |              | (26,412       | ) |   |   | (4,836 | ) |
|     Increase in progress billings                                                                             |   |              | 446,090       |   |   |   | - |   |
|     Decrease in accrued expenses                                                                              |   |              | 321,269       |   |   |   | (317,498 | ) |
| Net cash used in operating activities                                                                                             |   |              | (1,026,581    | ) |   |   | (808,001 | ) |
|                                                                                                                              |   |              |          |   |   |   |   |   |
| Cash flows from investing activities:                                                                                             |   |              |          |   |   |   |   |   |
|     Proceeds from the sale of capital asset                                                                   |   |              | 3,600         |   |   |   | - |   |
|     Purchases of equipment                                                                                    |   |              | (93,890       | ) |   |   | (16,108 | ) |
| Net cash used in investing activities                                                                                             |   |              | (90,290       | ) |   |   | (16,108 | ) |
|                                                                                                                              |   |              |          |   |   |   |   |   |
| Cash flows from financing activities:                                                                                             |   |              |          |   |   |   |   |   |
|     Proceeds from the issuance of common stock                                                                |   |              | 50,000        |   |   |   | 359,470 |   |
|     Proceeds from the exercise of stock options                                                               |   |              | 9,925         |   |   |   | 170,415 |   |
|     Proceeds from long-term debt                                                                              |   |              | 2,500,000     |   |   |   | - |   |
|     Expenses associated with long-term debt                                                                   |   |              | (527,796      | ) |   |   | - |   |
|     Proceeds from borrowings from line of credit                                                              |   |              | 400,000       |   |   |   |   |   |
|     Repayment of line of credit                                                                               |   |              | (1,000,000    | ) |   |   | 150,000 |   |
| Net cash provided by financing activities                                                                                         |   |              | 1,432,129     |   |   |   | 679,885 |   |
|                                                                                                                              |   |              |          |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                              |   |              | 315,258       |   |   |   | (144,224 | ) |
| Cash and cash equivalents at beginning of period                                                                                  |   |              | 173,048       |   |   |   | 601,887 |   |
| Cash and cash equivalents at end of period                                                                                        |   | $                 | 488,306       |   |   | $ | 457,663 |   |
|                                                                                                                              |   |              |          |   |   |   |   |   |
| Taxes paid                                                                                                                        |   | $                 |  -       |   |   | $ |  3,470 |   |
| Interest paid                                                                                                                     |   | $                 | 49,221        |   |   | $ |  9,656 |   |
|                                                                                                                              |   |              |          |   |   |   |   |   |

----

| Note 2 | Revenue Recognition – Percentage-of-Completion – ITATS (“Intermediate Level TACAN Test Set”) (AN/ARM-206) |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                             |   | September 30, 2010 |      |   | March 31, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|----------------|--------|
|                                                                                                                                                                                                                             |   |               |      |   |           |   |
|                                 Government                            |   | $                  | 1,737,983 |   |           | $      | 735,184 |   |
|                                 Commercial                            |   |               | 330,311   |   |           |   | 243,878 |   |
|                                 Less: Allowance for doubtful accounts |   |               | (36,670   | )      |           |   | (39,919 | ) |
|                                                                                                                                                                                                                             |   |               |      |   |           |   |   |   |
|                                                                                                                                                                                                                             |   | $                  | 2,031,624 |   |           | $      | 939,143 |   |

----

|                                                                                                                                                                     |   | September 30, 2010 |      |   | March 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|----------------|--------|
|                                                                                                                                                                     |   |               |      |   |           |   |
|                          Purchased parts    |   | $                  | 2,136,743 |   |           | $      | 1,432,782 |   |
|                          Work-in-process         |   |               | 1,626,487 |   |           |   | 1,142,851 |   |
|                          Finished goods          |   |               | 78,534    |   |           |   | 76,594 |   |
|                          Less: Inventory reserve |   |               | (430,000  | )      |           |   | (410,000 | ) |
|                                                                                                                                                                     |   |               |      |   |           |   |   |   |
|                                                                                                                                                                     |   | $                  | 3,411,764 |   |           | $      | 2,242,227 |   |

|                                                                                                                                                 |   | Three Months Ended |      |   | Three Months Ended |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|--------------------|--------|
|                                                                                                                                                 |   | September 30, 2010 |      |   | September 30, 2009 |   |
| Basic and diluted net loss per share computation:                                                                                                    |   |               |      |   |               |   |
|   Net loss attributable to common stockholders                                                                                             |   | $                  | (87,994   | )      |               | $      | (181,418 | ) |
|   Weighted-average common shares outstanding                                                                                               |   |               | 2,622,415 |   |               |   | 2,504,794 |   |
|   Basic and diluted net  loss per share attributable to common         stockholders |   | $                  | (0.03     | )      |               | $      | (0.07 | ) |

|                                                                                                                                                 |   | Six Months Ended   |     |   | Six Months Ended   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------|--------|--------------------|--------|
|                                                                                                                                                 |   | September 30, 2010 |     |   | September 30, 2009 |   |
| Basic and diluted net loss per share computation:                                                                                                    |   |               |     |   |               |   |
|   Net loss attributable to common stockholders                                                                                             |   | $                  | (363,406 | )      |               | $      | (590,149 | ) |
|   Weighted-average common shares outstanding                                                                                               |   |               | 2,619,38 |   |               |   | 2,491,848 |   |
|   Basic and diluted net  loss per share attributable to common         stockholders |   | $                  | (0.14    | )      |               | $      | (0.24 | ) |

----

----

| Three Months EndedSeptember 30, 2010        |   | AvionicsGov’t |      |   | AvionicsComm’l. |   |    | AvionicsTotal |      |   | MarineSystems |   |   | CorporateItems |   |   |   Total |   |
|---------------------------------------------|--------|---------------------|-----------|--------|-----------------------|--------|---------|---------------|-----------|--------|---------------|--------|--------|----------------|--------|--------|--------------|--------|
| Net sales                                   |   | $                   | 2,397,847 |   |                  | $      | 658,086 |          |      | $      | 3,055,933     |   |   |           | -      |   |         |   | - |   |   | $ | 3,055,933 |   |
| Cost of Sales                               |   | _1,179,606          |      |   | _407,092              |   |    |          | 1,586,698 |   |          |   | -      |           |   |   | -            |   |   |   | 1,586,698 |   |
|                                        |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Gross Margin                                |   |                | 1,218,241 |   |                  |   | 250,994 |          |      |   | 1,469,235     |   |   |           | -      |   |         |   | - |   |   |   | 1,469,235 |   |
|                                        |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Engineering, research, and Development |   |                |      |   |                  |   |    |          |      |   | 861,090       |   |   |           | -      |   |         |   | - |   |   |   | 861,090 |   |
| Selling, general, and admin.                |   |                |      |   |                  |   |    |          |      |   | 347,704       |   |   |           | -      |   |         | $      | 344,927 |   |   |   | 692,631 |   |
| Gain on sale of asset                       |   |                |      |   |                  |   |    |          |      |   | -             |   |   |           | -      |   |         |   | - |   |   |   | - |   |
| Amortization                                |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   | 14,763 |   |   |   | 14,763 |   |
| Interest (income) expense,net               |   |                |      |   |                  |   |    |          |      |   | -             |   |   |           |   |   |         |   | 47,093 |   |   |   |  47,093 |   |
| Total expenses                              |   |                |      |   |                  |   |    |          |      |   | 1,208,794     |   |   |           | -      |   |         |   | 406,783 |   |   |   | 1,615,577 |   |
|                                        |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Loss before income taxes                    |   |                |      |   |                  |   |    |          |      | $      | 260,441       |   |   |           | -      |   |         | $      | (406,783 | ) |   | $ | (146,342 | ) |

| Three Months EndedSeptember 30, 2009        |   | AvionicsGov’t |      |   | AvionicsComm’l. |   |    | AvionicsTotal |      |   | MarineSystems |   |   | CorporateItems |   |   |   Total |   |
|---------------------------------------------|--------|---------------------|-----------|--------|-----------------------|--------|---------|---------------|-----------|--------|---------------|--------|--------|----------------|--------|--------|--------------|--------|
| Net sales                                   |   | $                   | 1,798,305 |   |                  | $      | 586,049 |          |      | $      | 2,384,354     |   |   | $              | 26,757 |   |         |   | - |   |   | $ | 2,411.,111 |   |
| Cost of Sales                               |   | _788,216            |      |   | _371,889              |   |    |          | 1,160,105 |   |          |   | 3,354  |           |   |   | -            |   |   |   | 1,163,459 |   |
|                                        |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Gross Margin                                |   |                | 1,010,089 |   |                  |   | 214,160 |          |      |   | 1,224,249     |   |   |           | 23,403 |   |         |   | - |   |   |   | 1,247,652 |   |
|                                        |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Engineering, research, and development |   |                |      |   |                  |   |    |          |      |   | 815,203       |   |   |           | 12,349 |   |         |   | - |   |   |   | 827,552 |   |
| Selling, general, and admin.                |   |                |      |   |                  |   |    |          |      |   | 362,500       |   |   |           | 91     |   |         | $      | 348,218 |   |   |   | 710,809 |   |
| Interest (income) expense,net               |   |                |      |   |                  |   |    |          |      |   | -             |   |   |           | -      |   |         |   | 11,402 |   |   |   |  11,402 |   |
| Total expenses                              |   |                |      |   |                  |   |    |          |      |   | 1,177,703     |   |   |           | 12,440 |   |         |   | 359,620 |   |   |   | 1,549,763 |   |
| 7                                           |   |                |      |   |                  |   |    |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Loss before income taxes                    |   |                |      |   |                  |   |    |          |      | $      | 46,546        |   |   | $              | 10,963 |   |         |   | (359,620 | ) |   | $ | (302,111 | ) |

| Six Months EndedSeptember 30, 2010          |   | AvionicsGov’t |      |   | AvionicsComm’l. |   |      | AvionicsTotal |      |   | MarineSystems |   |   | CorporateItems |   |   |   Total |   |
|---------------------------------------------|--------|---------------------|-----------|--------|-----------------------|--------|-----------|---------------|-----------|--------|---------------|--------|--------|----------------|--------|--------|--------------|--------|
| Net sales                                   |   | $                   | 4,246,320 |   |                  | $      | 1,264,893 |          |      | $      | 5,511,213     |   |   |           | -      |   |         |   | - |   |   | $ | 5,551,213 |   |
| Cost of Sales                               |   | _2,120,278          |      |   | _839,320              |   |      |          | 2,959,598 |   |          |   | -      |           |   |   | -            |   |   |   | 2,959,598 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Gross Margin                                |   |                | 2,126,042 |   |                  |   | 425,573   |          |      |   | 2,551,615     |   |   |           | -      |   |         |   | - |   |   |   | 2,551,615 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Engineering, research, and Development |   |                |      |   |                  |   |      |          |      |   | 1,618,436     |   |   |           | -      |   |         |   | - |   |   |   | 1,618,436 |   |
| Selling, general, and admin.                |   |                |      |   |                  |   |      |          |      |   | 695,799       |   |   |           | -      |   |         | $      | 754,876 |   |   |   | 1,450,675 |   |
|  Gain on sale of asset                 |   |                |      |   |                  |   |      |          |      |   | -             |   |   |           | -      |   |         |   | (3,600 | ) |   |   | (3,600 | ) |
| Amortization                                |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   | 20,532 |   |   |   | 20,237 |   |
| Interest expense,net                        |   |                |      |   |                  |   |      |          |      |   | -             |   |   |           | -      |   |         |   | 70,551 |   |   |   | 70,551 |   |
| Total expenses                              |   |                |      |   |                  |   |      |          |      |   | 2,314,235     |   |   |           | -      |   |         |   | 842,349 |   |   |   | 3,156,594 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Loss before income taxes                    |   |                |      |   |                  |   |      |          |      | $      | 237,380       |   |   |           | -      |   |         | $      | (842,349 | ) |   | $ | (604,979 | ) |

| Six Months EndedSeptember 30, 2009          |   | AvionicsGov’t |      |   | AvionicsComm’l. |   |      | AvionicsTotal |      |   | MarineSystems |   |   | CorporateItems |   |   |   Total |   |
|---------------------------------------------|--------|---------------------|-----------|--------|-----------------------|--------|-----------|---------------|-----------|--------|---------------|--------|--------|----------------|--------|--------|--------------|--------|
| Net sales                                   |   | $                   | 3,689,545 |   |                  | $      | 1,020,564 |          |      | $      | 4,710,109     |   |   | $              | 43,201 |   |         |   | - |   |   | $ | 4,753,310 |   |
| Cost of Sales                               |   | _1,762,441          |      |   | _655,330              |   |      |          | 2,417,771 |   |          |   | 9,425  |           |   |   | -            |   |   |   | 2,427,196 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Gross Margin                                |   |                | 1,927,104 |   |                  |   | 365,234   |          |      |   | 2,292,338     |   |   |           | 33,776 |   |         |   | - |   |   |   | 2,326,114 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Engineering, research, and development |   |                |      |   |                  |   |      |          |      |   | 1,748,075     |   |   |           | 24,089 |   |         |   | - |   |   |   | 1,772,164 |   |
| Selling, general, and admin.                |   |                |      |   |                  |   |      |          |      |   | 860,893       |   |   |           | 240    |   |         | $      | 657,073 |   |   |   | 1,518,206 |   |
| Interest (income) expense,net               |   |                |      |   |                  |   |      |          |      |   | -             |   |   |           | -      |   |         |   | 18,503 |   |   |   |  18,503 |   |
| Total expenses                              |   |                |      |   |                  |   |      |          |      |   | 2,608,968     |   |   |           | 24,329 |   |         |   | 675,576 |   |   |   | 3,308,873 |   |
|                                        |   |                |      |   |                  |   |      |          |      |   |          |   |   |           |   |   |         |   |   |   |   |   |   |   |
| Loss before income taxes                    |   |                |      |   |                  |   |      |          |      | $      | (316,630      | )      |   | $              | 9,447  |   |         | $      | (675,576 | ) |   | $ | (982,759 | ) |

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| September  30, 2010 |   | Level I                                                                                                                                                                                                                          |   |   | Level II                                                                                                                                                                                                               |   |   | Level III                                                                                                                                                                                                                   |   |   | Total                                                                                                                                                                                                                            |   |
|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Total Assets                  |   |  $                                    - |   |   |  $                                    - |   |   |  $                                    - |   |   | $                                     - |   |
|                          |   |                                                                                                                                                                                                                             |   |   |                                                                                                                                                                                                                        |   |   |                                                                                                                                                                                                                             |   |   |                                                                                                                                                                                                                             |   |
| Warrant liability             |   |                                                                                                                                                                                                                             | -      |   |                                                                                                                                                                                                                        |   | -      |                                                                                                                                                                                                                             |   |   | 281,656                                                                                                                                                                                                                          |   |   |   | 281,656 |   |
| Total Liabilities             |   | $                                                                                                                                                                                                                                | -      |   |                                                                                                                                                                                                                        | $      | -      |                                                                                                                                                                                                                             |   | $      | 281,656                                                                                                                                                                                                                          |   |   | $ | 281,656 |   |
|                          |   |                                                                                                                                                                                                                             |   |   |                                                                                                                                                                                                                        |   |   |                                                                                                                                                                                                                             |   |   |                                                                                                                                                                                                                             |   |   |   |   |   |

| March 31, 2010    |   | Level I                                                                                                                                                                                                                          |   |   | Level II                                                                                                                                                                                                               |   |   | Level III                                                                                                                                                                                                              |   |   | Total                                                                                                                                                                                                                      |   |
|-------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Total Assets      |   | $                                     - |   |   |  $                                    - |   |   | $                                     - |   |   | $       -                              |   |
|              |   |                                                                                                                                                                                                                             |   |   |                                                                                                                                                                                                                        |   |   |                                                                                                                                                                                                                        |   |   |                                                                                                                                                                                                                       |   |
| Total Liabilities |   | $                                                                                                                                                                                                                                | -      |   |                                                                                                                                                                                                                        | $      | -      |                                                                                                                                                                                                                        |   | $      | -                                                                                                                                                                                                                          |   |   | $ | - |   |

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| 1.   | The Note has a term of five (5) years with an interest rate of 14% on the outstanding principal amount. Payments for the first year are interest only, and after the first year the Company will make monthly payments of approximately $69,000 for the remaining term of the loan. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   |  The Company issued BCA  a nine-year warrant for 136,090 shares, based upon 4.5% of the fully –diluted outstanding shares of the Company’s common stock at $6.70 per share, the average closing price over the three days preceding the closing on the NYSE-Amex Exchange. In the event of specific major corporate events or the maturity of the five-year loan, BCA can require the Company to purchase the warrant and warrant shares at the higher of the then Exchange market price or five times operating income per share. In connection with the warrant issued in conjunction with this debt, the Company recorded a debt discount and warrant liability of $267,848, which will be marked to fair value at the end of each period (see Note 9). The debt discount is to be amortized over the life of the loan. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Loan provisions also contain customary representations and warranties. |
|----------------|------------------------------------------------------------------------|

| 4.   | BCA has a lien on all of the Company’s assets. |
|----------------|------------------------------------------------------|

| 5.   | Provisions of the loan also include certain financial covenants that the Company must comply with, beginning December 31, 2010. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------|

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