freqelec20240731

freqelec20240731_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended July 31, 2024

☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-8061

FREQUENCY ELECTRONICS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	11-1986657
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

55 Charles Lindbergh Blvd., Mitchel Field, NY	11553
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 516-794-4500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock (par value $1.00 per share)	FEIM	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐
Non-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 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 ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of registrant’s Common Stock, par value $1.00 per share, as of September 11, 2024 – 9,566,918

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

TABLE OF CONTENTS

	Page No.
Part I. Financial Information:

Item 1 - Financial Statements:

Condensed Consolidated Balance Sheets – July 31, 2024 (unaudited) and April 30, 2024	3

Condensed Consolidated Statements of Operations and Comprehensive Income – Three Months Ended July 31, 2024 and 2023 (unaudited)	4

Condensed Consolidated Statements of Cash Flows Three months ended July 31, 2024 and 2023 (unaudited)	5

Condensed Consolidated Statements of Changes in Stockholders’ Equity – Three Months Ended July 31, 2024 and 2023 (unaudited)	6

Notes to Condensed Consolidated Financial Statements (unaudited)	7-12

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-17

Item 3 - Quantitative and Qualitative Disclosures About Market Risk	18

Item 4 - Controls and Procedures	18-19

Part II. Other Information:

Item 1A – Risk Factors	20

Item 5 – Other Information	20

Item 6 - Exhibits	20

Signatures	21

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except par value)

	July 31,			April 30,
	2024			2024
	(UNAUDITED)
ASSETS:
Current assets:
Cash and cash equivalents	$	16,201		$	18,320
Accounts receivable, net of allowances of $110 at July 31, 2024 and April 30, 2024		5,922			4,614
Contract assets		10,817			10,523
Inventories		24,308			23,431
Prepaid income taxes		-			37
Prepaid expenses and other		1,977			1,196
Total current assets		59,225			58,121
Property, plant, and equipment, net		6,304			6,438
Goodwill		617			617
Cash surrender value of life insurance		10,379			10,221
Right-of-use assets – operating leases		5,646			6,036
Restricted cash		1,217			945
Other assets		876			875
Total assets	$	84,264		$	83,253

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable – trade	$	1,553		$	2,348
Accrued liabilities		4,938			4,765
Loss provision accrual		234			404
Dividend payable		9,567			-
Income taxes payable		79			-
Operating lease liability – current portion		1,468			1,640
Contract liabilities		20,854			21,639
Total current liabilities		38,693			30,796
Deferred compensation		8,050			8,088
Deferred taxes		18			8
Operating lease liability – non-current portion		4,301			4,545
Total liabilities		51,062			43,437

Stockholders’ equity:
Preferred stock - $1.00 par value; authorized 600 shares, no shares issued		-			-
Common stock - $1.00 par value; authorized 20,000 shares, 9,568 shares issued and 9,562 shares outstanding at July 31, 2024; 9,512 shares issued and 9,511 shares outstanding at April 30, 2024		9,568			9,512
Additional paid-in capital		41,296			50,334
Accumulated deficit		(17,597	)		(20,027	)
Common stock reacquired and held in treasury - at cost (5 shares at July 31, 2024 and 1 share at April 30, 2024)		(65	)		(3	)
Total stockholders’ equity		33,202			39,816
Total liabilities and stockholders’ equity	$	84,264		$	83,253

See accompanying notes to condensed consolidated financial statements.

	Three Months Ended July 31,
	2024			2023
Condensed Consolidated Statements of Operations
Revenues	$	15,077		$	12,408
Cost of revenues		8,379			7,540
Gross margin		6,698			4,868
Selling and administrative expenses		2,845			2,302
Research and development expenses		1,488			506
Operating income		2,365			2,060

Other income (expense):
Income on investments		224			20
Interest expense		(26	)		(31	)
Income before provision for income taxes		2,563			2,049
Provision for income taxes		133			7
Net income	$	2,430		$	2,042

Net income per common share:
Basic and diluted income per share	$	0.25		$	0.22

Weighted average shares outstanding:
Basic and diluted		9,538			9,384

					Additional						Treasury stock					Accumulated other
	Common Stock				paid in			Accumulated			(at cost)					comprehensive
	Shares		Amount		capital			Deficit			Shares		Amount			Income (loss)		Total
Balance at April 30, 2024		9,511,560	$	9,512	$	50,334		$	(20,027	)		741	$	(3	)	$	-	$	39,816
Contribution of stock to 401(k) plan		26,457		26		215			-			-		-			-		241
Stock-based compensation expense		27,815		28		316			-								-		344
Shares withheld on employee taxes on vested equity awards		-		-		-			-			4,569		(62	)		-		(62	)
Exercise of stock options and stock appreciation rights - net of shares tendered for exercise price		1,819		2		(2	)		-			-		-			-		-
Dividends payable		-		-		(9,567	)		-			-		-			-		(9,567	)
Net income		-		-		-			2,430			-		-			-		2,430
Balance at July 31, 2024		9,567,651	$	9,568	$	41,296		$	(17,597	)		5,310	$	(65	)	$	-	$	33,202

	July 31, 2024		April 30, 2024
Raw materials and component parts	$	15,218	$	14,939
Work in progress		8,627		8,035
Finished goods		463		457
	$	24,308	$	23,431

	July 31, 2024		April 30, 2024
Assets
Right-of-use assets - operating leases	$	5,646	$	6,036

Liabilities
Operating lease liabilities, current portion		1,468		1,640
Operating lease liabilities, non-current portion		4,301		4,545
Total lease liabilities	$	5,769	$	6,185

Fiscal Year Ending April 30,
(in thousands)

Remainder of 2025	$	1,175
2026		1,363
2027		964
2028		1,262
2029		1,389
Thereafter		587
Total lease payments		6,740
Less imputed interest		(971	)
Present value of future lease payments		5,769
Less current obligations under leases		(1,468	)
Long-term lease obligations		4,301

Operating income:
FEI-NY	$	1,377		$	1,481
FEI-Zyfer		1,140			678
less intersegment margin		(15	)		(61	)
Corporate		(137	)		(38	)
Consolidated operating income	$	2,365		$	2,060

	July 31, 2024			April 30, 2024
Identifiable assets:
FEI-NY	$	38,641		$	36,512
FEI-Zyfer		15,683			15,696
less intersegment balances		(252	)		(237	)
Corporate		30,192			31,282
Consolidated identifiable assets	$	84,264		$	83,253

	Three months ended July 31,
	(in thousands)
Segment	2024			2023			Change
FEI-NY	$	10,975		$	9,490		$	1,485	15.6	%
FEI-Zyfer		4,272			3,267			1,005	30.8
Intersegment revenues		(170	)		(349	)		179	(51.3	)
	$	15,077		$	12,408		$	2,669	21.5	%

31.1 -	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 -	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 -	Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101-	The following materials from the Frequency Electronics, Inc. Quarterly Report on Form 10-Q for the quarter ended July 31, 2024 formatted in eXtensible Business Reporting Language (XBRL): (i) Cover Page, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Stockholders’ Equity and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within Inline XBRL document.

104-	Cover Page Interaction Data File (formatted as inline XBRL and contained in Exhibit 101).

	Three Months Ended July 31,
	2024								2023
	POC		POT			Total			POC		POT			Total
	Revenue		Revenue			Revenue			Revenue		Revenue			Revenue
FEI-NY	$	10,507	$	468		$	10,975		$	8,675	$	815		$	9,490
FEI-Zyfer		4,001		271			4,272			3,047		220			3,267
Intersegment		-		(170	)		(170	)		-		(349	)		(349	)
Revenue	$	14,508	$	569		$	15,077		$	11,722	$	686		$	12,408

	Three Months Ended July 31,
	2024		2023
Revenues by product line:
Satellite revenue	$	8,263	$	4,858
Government non-space revenue		6,270		6,878
Other commercial & industrial revenue		544		672
Consolidated revenues	$	15,077	$	12,408

	Three Months ended July 31,
	2024			2023
Effective tax rate on pre-tax book loss:		5.2	%		0.3	%

SEC Form 10-Q filed by Frequency Electronics Inc.