# FREQUENCY ELECTRONICS INC (FEIM)

Informational only - not investment advice.

CIK: 0000039020
SIC: 3825 Instruments For Meas & Testing of  Electricity & Elec Signals
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3825 Instruments For Meas & Testing of  Electricity & Elec Signals](/industry/3825/)
Latest 10-K filed: 2025-07-18
SEC page: https://www.sec.gov/edgar/browse/?CIK=39020
Filing source: https://www.sec.gov/Archives/edgar/data/39020/000118518525000806/feim10k043025.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 69811000 | USD | 2025 | 2025-07-18 |
| Net income | 23686000 | USD | 2025 | 2025-07-18 |
| Assets | 93737000 | USD | 2025 | 2025-07-18 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-07-18. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000039020.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  |  |  | 55,416,000 | 50,351,000 | 39,407,000 | 49,509,000 | 41,507,000 | 54,254,000 | 48,296,000 | 40,777,000 | 55,274,000 | 69,811,000 |
| Net income |  |  |  |  |  | 1,005,000 | -4,821,000 | -23,777,000 | -2,529,000 | -10,026,000 | 680,000 | -8,663,000 | -5,501,000 | 5,594,000 | 23,686,000 |
| Operating income |  |  |  |  |  | 2,468,000 | -7,525,000 | -12,395,000 | -2,817,000 | -10,922,000 | -958,000 | -8,038,000 | -4,672,000 | 5,019,000 | 11,732,000 |
| Gross profit |  |  |  |  |  | 19,275,000 | 11,249,000 | 5,163,000 | 15,789,000 | 5,748,000 | 16,921,000 | 8,599,000 | 7,849,000 | 18,583,000 | 30,097,000 |
| Diluted EPS | 0.72 | 0.86 | 0.43 | 0.46 | 0.32 | 0.11 | -0.55 |  |  |  |  |  |  | 0.59 | 2.46 |
| Operating cash flow |  |  |  |  |  | 2,923,000 | 3,888,000 | 4,533,000 | -97,000 | -1,407,000 | 12,157,000 | 4,036,000 | 1,175,000 | 8,708,000 | -1,428,000 |
| Capital expenditures |  |  |  |  |  | 3,263,000 | 5,233,000 | 1,418,000 | 2,767,000 | 1,483,000 | 1,239,000 | 1,860,000 | 918,000 | 1,492,000 | 1,808,000 |
| Dividends paid |  | 0.00 | 1,684,000 | 0.00 |  |  |  |  |  |  |  | 0.00 | 9,354,000 | 0.00 | 9,567,000 |
| Share buybacks |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.00 | 377,000 |
| Assets |  |  |  |  |  | 122,177,000 | 113,319,000 | 84,177,000 | 86,771,000 | 91,276,000 | 98,528,000 | 84,760,000 | 74,496,000 | 83,253,000 | 93,737,000 |
| Liabilities |  |  |  |  |  | 28,825,000 | 23,987,000 | 20,431,000 | 23,682,000 | 37,040,000 | 43,119,000 | 38,072,000 | 41,610,000 | 43,437,000 | 38,117,000 |
| Stockholders' equity |  |  |  |  |  | 93,352,000 | 89,332,000 | 63,262,000 | 63,089,000 | 54,236,000 | 55,409,000 | 46,688,000 | 32,886,000 | 39,816,000 | 55,620,000 |
| Cash and cash equivalents |  |  |  |  |  | 5,818,000 | 2,163,000 | 7,869,000 | 3,683,000 | 3,808,000 | 9,807,000 | 11,561,000 | 12,049,000 | 18,320,000 | 4,720,000 |
| Free cash flow |  |  |  |  |  | -340,000 | -1,345,000 | 3,115,000 | -2,864,000 | -2,890,000 | 10,918,000 | 2,176,000 | 257,000 | 7,216,000 | -3,236,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  |  |  | 1.81% | -9.57% | -60.34% | -5.11% | -24.15% | 1.25% | -17.94% | -13.49% | 10.12% | 33.93% |
| Operating margin |  |  |  |  |  | 4.45% | -14.95% | -31.45% | -5.69% | -26.31% | -1.77% | -16.64% | -11.46% | 9.08% | 16.81% |
| Return on equity |  |  |  |  |  | 1.08% | -5.40% | -37.58% | -4.01% | -18.49% | 1.23% | -18.56% | -16.73% | 14.05% | 42.59% |
| Return on assets |  |  |  |  |  | 0.82% | -4.25% | -28.25% | -2.91% | -10.98% | 0.69% | -10.22% | -7.38% | 6.72% | 25.27% |
| Liabilities / equity |  |  |  |  |  | 0.31 | 0.27 | 0.32 | 0.38 | 0.68 | 0.78 | 0.82 | 1.27 | 1.09 | 0.69 |
| Current ratio |  |  |  |  |  | 8.33 | 8.61 | 9.84 | 9.03 | 3.74 | 2.97 | 2.56 | 1.77 | 1.89 | 2.26 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-17. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000039020.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2021-Q3 | 2021-01-31 |  |  | -0.09 | reported discrete quarter |
| 2022-Q1 | 2021-07-31 |  |  | -0.17 | reported discrete quarter |
| 2022-Q2 | 2021-10-31 |  |  | 0.05 | reported discrete quarter |
| 2022-Q3 | 2022-01-31 |  |  | -0.08 | reported discrete quarter |
| 2023-Q1 | 2022-07-31 |  |  | -0.33 | reported discrete quarter |
| 2023-Q2 | 2022-10-31 |  |  | -0.25 | reported discrete quarter |
| 2023-Q4 | 2023-04-30 | 13,004,000 | 246,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2023-07-31 | 12,408,000 | 2,042,000 |  | reported discrete quarter |
| 2024-Q2 | 2023-07-31 |  | 2,042,000 |  | reported discrete quarter |
| 2024-Q2 | 2023-10-31 | 13,575,000 |  |  | reported discrete quarter |
| 2024-Q3 | 2023-10-31 |  | 797,000 |  | reported discrete quarter |
| 2024-Q3 | 2024-01-31 | 13,714,000 |  |  | reported discrete quarter |
| 2024-Q4 | 2024-04-30 | 15,576,000 | 2,625,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2024-07-31 | 15,077,000 | 2,430,000 | 0.25 | reported discrete quarter |
| 2025-Q2 | 2024-07-31 |  | 2,430,000 |  | reported discrete quarter |
| 2025-Q2 | 2024-10-31 | 15,820,000 |  | 0.28 | reported discrete quarter |
| 2025-Q3 | 2024-10-31 |  | 2,654,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-01-31 | 18,927,000 |  | 1.60 | reported discrete quarter |
| 2025-Q4 | 2025-04-30 | 19,986,000 | 3,197,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2025-07-31 | 13,812,000 | 634,000 | 0.07 | reported discrete quarter |
| 2026-Q2 | 2025-07-31 |  | 634,000 |  | reported discrete quarter |
| 2026-Q2 | 2025-10-31 | 17,127,000 |  | 0.18 | reported discrete quarter |
| 2026-Q3 | 2025-10-31 |  | 1,801,000 |  | reported discrete quarter |
| 2026-Q3 | 2026-01-31 | 16,890,000 |  | 0.16 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/39020/000118518526000893/feim10q013126.htm

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-03-17
Report date: 2026-01-31

Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Safe
Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

The
statements in this Quarterly Report on Form 10-Q (“Form 10-Q”) regarding future earnings and operations and other statements
relating to the future constitute “forward-looking” statements pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results
to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include but are
not limited to, our inability to integrate operations and personnel, actions by significant customers or competitors, general domestic
and international economic conditions, reliance on key customers, including the U.S government, continued acceptance of the Company’s
products in the marketplace, competitive factors, new products and technological changes, product prices and raw material costs, dependence
upon third-party vendors, other supply chain related issues, increasing costs for materials, operating related expenses, competitive
developments, changes in manufacturing and transportation costs, the availability of capital, the outcome of any litigation and arbitration
proceedings, and failure to maintain an effective system of internal controls over financial reporting. The factors listed above are
not exhaustive. Other sections of this Form 10-Q and in Part I, Item 1A (Risk Factors) of the Company’s Annual Report on Form 10-K
for the fiscal year ended April 30, 2025 (the “Form 10-K”) include additional factors that could materially and adversely
impact the Company’s business, financial condition and results of operations. Moreover, the Company operates in a very competitive
and rapidly changing environment. New factors emerge from time to time and it is not possible for management to predict the impact of
all these factors on the Company’s business, financial condition or results of operations or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these
risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. Any or all of the
forward-looking statements contained in this Form 10-Q and any other public statement made by the Company or its management may turn
out to be incorrect. The Company expressly disclaims any obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.

Critical
Accounting Policies and Estimates

The
Company believes its most critical accounting policies to be the recognition of revenue and costs on production contracts and the valuation
of inventory. Both of these areas require the Company to make use of reasonable estimates including estimating the cost to complete
a contract, the realizable value of its inventory and the market value of its products. Changes in estimates can have a material
impact on the Company’s financial position and results of operations. The Company’s significant accounting policies did not
change during the three and nine months ended January 31, 2026.

Revenue
Recognition

Revenues
are reported in operating results predominantly over time using the cost-to-cost method. Under this method, revenue is recorded based
upon the ratio that incurred costs bear to total estimated contract costs with related cost of revenues recorded as the costs are incurred.
Each month management reviews estimated contract costs through a process of aggregating actual costs incurred and estimating additional
costs to completion based upon the current available information regarding labor, outside services, materials, overhead costs, and status
of the contract. The effect of any change in the estimated gross margin rate (“GM Rate”) for a contract is reflected in revenues
in the period in which the change is known. Provisions for the full amount of anticipated losses on contracts are made in the period
in which they become determinable.

Significant
judgment is used in evaluating the financial information for certain contracts to determine an appropriate budget and estimated cost.
The Company evaluates this information continuously and bases its judgments on historical experience, design specifications, and expected
costs for material and labor. 

Inventories

In
accordance with industry practice, inventoried costs contain amounts relating to contracts and programs with long production cycles,
a portion of which will not be realized within one year.  Inventory write downs are established for slow-moving materials based
on percentage of usage over a ten-year period, obsolete items on a gradual basis over five years with no usage and costs incurred on
programs for which production-level orders cannot be determined as probable.  Such write-downs are based upon management’s
experience and estimates for future business.  Any changes arising from revised estimates are reflected in cost of revenues in the
period the revision is made.

16

Table of Contents

FREQUENCY
ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

Income
Taxes

We
are subject to income taxes in the U.S. and significant judgment is required in determining our provision for income taxes, our deferred
tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets that are not more likely than not
to be realized. We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period.
In completing our assessment of realizability of our deferred tax assets, we consider our history of income (loss) measured at pre-tax
income (loss) adjusted for permanent book-tax differences on a jurisdictional basis, volatility in actual earnings, excess tax benefits
related to stock-based compensation in recent prior years and impacts of the timing of reversal of existing temporary differences. We
also rely on our assessment of the Company’s projected future results of business operations, including uncertainty in future operating
results relative to historical results, volatility in the market price of our common stock and its performance over time, variable macroeconomic
conditions impacting our ability to forecast future taxable income, and changes in business that may affect the existence and magnitude
of future taxable income. Our valuation allowance assessment is based on our best estimate of future results considering all available
information.

Our
provision for or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted
for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective
tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

RESULTS
OF OPERATIONS

The
table below sets forth for the three and nine months ended January 31, 2026 and 2025, respectively, the percentage of consolidated revenues
represented by certain items in the Company’s condensed consolidated statements of operations or notes to the condensed consolidated

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Safe
Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

The
statements in this Annual Report on Form 10-K regarding future earnings and operations and other statements relating to the future constitute
“forward-looking” statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 
Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking
statements.  Factors that would cause or contribute to such differences include, but are not limited to, the risks associated with
reliance on key customers, including the U.S. government, the Company’s use of estimates when accounting for contracts, actions
by significant customers or competitors, competitive factors, new products and technological changes, continued acceptance of the Company’s
products in the marketplace, dependence upon third-party vendors, product prices and raw material costs, the Company’s ability
to attract and retain key employees, general domestic and international economic conditions, health epidemics and pandemics, external
disruptions to the Company’s facilities or supply chain, the Company’s operations in a highly regulated industry, the outcome
of any litigation and arbitration proceedings, cybersecurity attacks, volatility in the Company’s stock price, including due to
the relatively low trading volume of its common stock, and failure to maintain an effective system of internal controls over financial
reporting. The factors listed above are not exhaustive.  Other sections of this Form 10-K include additional factors that could
materially and adversely impact the Company’s business, financial condition and results of operations.  Moreover, the Company
operates in a very competitive and rapidly changing environment.  New factors emerge from time to time and it is not possible for
management to predict the impact of all these factors on the Company’s business, financial condition or results of operations or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements.  Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction
of actual results.  Any or all of the forward-looking statements contained in this Form 10-K and any other public statement made
by the Company or its management may turn out to be incorrect.  The Company expressly disclaims any obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

17

Table of Contents

Critical
Accounting Estimates

The
Company’s significant accounting policies are described in Note 1 to the Consolidated Financial Statements. The Company believes
its most critical accounting policies to be the recognition of revenue and costs on production contracts, income taxes and the valuation
of inventory. Each of these areas requires the Company to make use of reasonable estimates, including estimating the cost to complete
a contract, the realizable value of its inventory or the market value of its products. Changes in estimates can have a material impact
on the Company’s financial position and results of operations.

Revenue
Recognition

Revenues
for most contracts are reported in operating results over time using the cost-to-cost method. Under this method, revenue is recorded
based upon the ratio that incurred costs bear to total estimated contract costs with related cost of revenues recorded as the costs are
incurred. Each month management reviews estimated contract costs through a process of aggregating actual costs incurred and estimating
additional costs to completion based upon the current available information regarding labor, outside services, materials, overhead costs
and status of the contract. The effect of any change in the estimated gross margin rate for a contract is reflected in revenues in the
period in which the change is known. Provisions for the full amount of anticipated losses on contracts are made in the period in which
they become determinable.

Significant
judgment is used in evaluating the financial information for certain contracts to determine an appropriate budget and estimated cost.
The Company evaluates this information continuously and bases its judgments on historical experience, design specifications, and expected
costs for material and labor.

Inventory

In
accordance with industry practice, inventoried costs contain amounts relating to contracts and programs with long production cycles,
a portion of which will not be realized within one year. Inventory write downs are established for slow-moving materials based on percentage
of usage over a ten-year period, obsolete items on a gradual basis over five years with no usage and costs incurred on programs for which
production-level orders cannot be determined as probable. Such write-downs are based upon management’s experience and expectations
for future business.

Income
Taxes

Our
income tax expense, deferred tax asset and liabilities, and liabilities for unrecognized tax benefits reflect management’s best
estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated
income tax expense.

Deferred
income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial
statements, which will result in taxable or deductible amounts in the future. Accounting for income taxes requires that a valuation allowance
be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In evaluating our
ability to recover deferred tax assets in the jurisdiction from which they arise, we consider all positive and negative evidence, including
the reversal of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations.
In circumstances where there is sufficient negative evidence indicating that the deferred tax assets will not be realizable, we establish
a valuation allowance. For the fiscal year ended April 30, 2025, the valuation allowance decreased by approximately $13.9 million from
the prior fiscal year primarily due to releasing the majority of the valuation allowance recorded against the deferred tax asset. The
change in estimate occurred in the quarter ended January 31, 2025 because Frequency no longer had cumulative losses in recent years due
to significant earnings in the quarter ended January 31, 2025.

The
Company maintains a valuation allowance of approximately $1.4 million against certain deferred tax assets including state tax credits
and capital loss carryforwards because the realization of these tax attributes requires sufficient taxable income be sourced to the respective
state jurisdiction and capital gain income is required to utilize capital losses. The Company will continue to evaluate the realizability
of its deferred tax assets quarterly. Any further increases or decreases in the valuation allowance could have an unfavorable or favorable
impact on the Company’s income tax provision and net income in the period in which such determination is made. As of April 30,
2025, the deferred tax asset is recorded at its more-likely-than-not realizable amount.

18

Table of Contents

Tax
benefits are recognized for an uncertain tax position when, in the Company’s judgment, it is more likely than not that the position
will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold,
the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate
settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing
circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified.
The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as
considered appropriate by the Company. While it is often difficult to predict the final outcome or the timing of resolution of any particular
tax matter, the Company believes its liability for unrecognized tax benefits is adequate.

RESULTS
OF OPERATIONS

Consolidated
Results

The
table below sets forth for the fiscal years ended April 30, 2025 and 2024, the percentage of consolidated net sales represented by certain
items in the Company’s consolidated statements of operations:

Fiscal
Years Ended

April 30,

2025

2024

Revenues

FEI-NY

76.3

%

72.9

%

FEI-Zyfer

26.7

32.8

Less intersegment revenues

(3.0

)

(5.7

)

100.0

100.0

Cost of revenues

56.9

66.4

Gross margin

43.1

33.6

Selling and administrative expenses

17.6

18.4

Research and development expenses

8.7

6.1

Operating income

16.8

9.1

Other income, net

0.6

0.8

Benefit from income taxes

(16.5

)

(0.2

)

Net income

33.9

%

10.1

%

Revenues

Fiscal Years
Ended April 30,

(in
thousands)

Segment

2025

2024

Change

FEI-NY

$

53,269

$

40,261

$

13,008

32.3

%

FEI-Zyfer

18,660

18,138

522

2.9

%

Intersegment revenues

(2,118

)

(3,125

)

1,007

(32.2

)%

$

69,811

$

55,274

$

14,537

26.3

%

For
the fiscal year ended April 30, 2025 revenue increased by approximately $14.5 million, or 26%, compared to the prior fiscal year. The
Company is encouraged by the significant revenue growth compared to the prior fiscal year. The majority of the increase in revenue for
fiscal year 2025, as compared to fiscal year 2024, was as a result of an increase in sales in the U.S. Government/DOD Satellite market.
In fiscal year 2025, revenues from satellite programs, one of the Company’s largest business areas, increased by $17.7 million,
or 76%, compared to the prior fiscal year. The increase was due mainly to adjustments in total estimated costs in the current period
resulting from efficiencies realized. Satellite program revenues for Government end-use were 53% and 40% of total revenues for fiscal
years 2025 and 2024, respectively. Satellite program revenues for commercial end-use were 6% and 2% of total revenue for fiscal years
2025 and 2024, respectively.

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Table of Contents

Revenues
on satellite program contracts are recorded in the FEI-NY segment and are recognized primarily under the percentage-of-completion (“POC”)
method. Revenues from non-space U.S. Government/DOD customers decreased by approximately $2.4 million, or 8%, in fiscal year 2025 compared
to fiscal year 2024. These revenues are recorded in both the FEI-NY and FEI-Zyfer segments and accounted for approximately 38% and 52%
of consolidated revenues for fiscal years 2025 and 2024, respectively. Other commercial and industrial sales accounted for approximately
3% and 6% of consolidated revenues for fiscal years 2025 and 2024, respectively. Sales in the other commercial and industrial sales area
were $2.4 million and $3.1 million for the fiscal year ended April 30, 2025 and the fiscal year ended April 30, 2024, respectively.

Gross
Profit

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

Gross Profit

$

30,097

$

18,583

$

11,514

62.0

%

Gross Profit Percentage

43.1

%

33.6

%

For
the fiscal year ended April 30, 2025, the gross profit and gross profit percentage increased as a result of several factors. The increase
in gross profit dollars was directly related to the significant increase in revenues over the prior fiscal year period as well as the
increase in gross margin. The majority of the increase in the gross profit percentage, as compared to the prior fiscal year, was in the
FEI-NY segment and was attributed to the Company’s performance on several traditional space programs at higher margins, due to
favorable cumulative catch-up adjustments, and those programs progressing ahead of schedule. In addition, the Company has new programs
that are progressing well, and the Company anticipates that they will generate additional revenue and profit.

Selling
and Administrative Expenses

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

$

12,289

$

10,184

$

2,105

20.7

%

In
fiscal years ended April 30, 2025 and 2024, selling and administrative expenses (“SG&A”) were 18% of consolidated revenues
in both periods. While total SG&A expenses increased in fiscal year 2025, as compared to the prior fiscal year, SG&A expenses
remained consistent as a percentage of revenue in fiscal year 2025. The approximately $2.1 million dollar increase is made up of mainly
payroll related items such as, 401K expense, stock option expense, and bonus accrual. In addition to these expenses, trade show and related
costs also increased during fiscal year 2025 as well.

Research
and Development Expenses

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

$

6,076

$

3,380

$

2,696

79.8

%

As
a percentage of consolidated revenue, R&D expense for the fiscal years ended April 30, 2025 and 2024 were 9% and 6%, respectively.
The Company funded R&D amount was higher in fiscal year 2025 as compared to the previous fiscal year, partially because the previous
fiscal year R&D expenditures was lower than planned and some of the expenses were subsequently captured in fiscal year 2025. The
increase in R&D expense also reflects the Company’s commitment to maintaining its technical excellence. The Company expects
future R&D investment to be in line with, or even potentially above, historical spending.

The
funds received in connection with customer funded R&D appears in revenues and the associated expenses are included in cost of revenues
and are not included in the table above. The Company believes that internally generated cash and cash reserves are adequate to fund its
future R&D activity.

20

Table of Contents

Operating
Income

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

$

11,732

$

5,019

$

6,713

133.8

%

For
the fiscal year ended April 30, 2025, the Company recorded operating income of $11.7 million compared to an operating income of $5.0
million in the prior fiscal year. The increase is mainly attributable to the Company’s significant increase in revenue and gross
margin during fiscal year 2025, as noted above, from traditional space programs that have been executed ahead of schedule, well within
budgets, and performed well technologically. The positive effects of cost cutting measures instituted by management have also contributed
to the increase.

Other
Income, net

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

Income on investments

$

519

$

561

$

(42

)

(7.5

)%

Interest expense

(104

)

(109

)

5

(4.6

)%

Other expense, net

(3

)

(7

)

4

(57.1

)%

$

412

$

445

$

(33

)

(7.4

)%

The
change from the prior fiscal year was relatively minimal. All three categories presented were slightly lower in fiscal year 2025 compared
to the prior fiscal year.

Income
Tax (Benefit) Provision

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Change

$

(11,542

)

$

(130

)

$

(11,412

)

8,778.5

%

Fiscal Years
Ended April 30,

(in
thousands)

2025

2024

Effective tax rate on pre-tax book
income (loss):

(95.0

)%

(2.4

)%

For
the fiscal year ended April 30, 2025, the Company recorded an income tax benefit of $11.5 million. For the fiscal year ended April 30,
2024, the Company recorded an income tax benefit of $0.1 million.

The
Company’s effective tax rate of (95.0)% for fiscal year 2025 differs from the U.S. federal statutory rate of 21% primarily due
to a reduction of the valuation allowance. (See Note 13 to the Consolidated Financial Statements for a reconciliation of the actual tax
benefit to the expected tax provision at the federal statutory rate.)

As
of April 30, 2025, the Company has U.S. federal net operating losses of $5 million of which $1.7 million begins to expire in fiscal year
2026 through fiscal year 2031. The U.S. federal net operating losses of $5 million includes $1.7 million which is subject to an annual
limitation under Internal Revenue Code Section 382. The remaining U.S. federal net operating losses of $3.4 million have an indefinite
carry-forward period. The U.S. federal capital loss carry-forward of $0.8 million expires in fiscal years 2028. U.S. federal R&D
credits of $0.7 million begin to expire in fiscal year 2038 through fiscal year 2045. The Company also has state net operating loss carryforwards,
and state tax credits that expire in various years and amounts.

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Table of Contents

On
July 4, 2025, President Trump signed H.R. 1, the “One Big Beautiful Bill Act”, into law.  In accordance with U.S. GAAP,
the Company will account for the tax effects of changes in tax law in the period of enactment which is Q1 of fiscal year 2026. The Company
is currently in the process of analyzing the tax impacts of the law change, but we do not expect a material impact on our financial statements.

LIQUIDITY
AND CAPITAL RESOURCES

Net
cash used in operations was $1.4 million in fiscal year 2025 compared to net cash provided by operations of $8.7 million in fiscal year
2024. The Company’s balance sheet continues to reflect a highly liquid position with working capital of $29.7 million at April
30, 2025 as compared to $27.3 million at April 30, 2024.  Included in working capital at April 30, 2025 was $4.7 million consisting
of cash and cash equivalents.  The Company’s current ratio at April 30, 2025 was 2.3 to 1, compared to 1.9 to 1 at April 30,
2024.

During
fiscal years 2025 and 2024, the Company incurred $5.9 million and $4.4 million, respectively, in non-cash charges to earnings, including
adjustments relating to net assets and liabilities for operating leases, loss provision accrual, deferred tax assets, depreciation and
amortization expense, inventory adjustments, warranty and accounts receivable reserves and certain employee benefit plan expenses, including
accounting for stock-based compensation. During fiscal year 2025, cash provided by operations was mainly due to increases in net income,
mainly in the U.S. Government/DOD Satellite market, and deferred tax assets primarily due to the reduction of the valuation allowance,
and partially offset by a decrease in contract liabilities and contract assets. During fiscal year 2024, cash flows relating to operating
activities increased as a result of decreases in the loss provision accrual and other liabilities and increases in contract assets and
inventory, partially offset by an increase in contract liabilities and net income.

Net
cash used in investing activities for the fiscal year ended April 30, 2025 was $1.8 million compared to $1.5 million used in investing
activities for the fiscal year ended April 30, 2024 all relating to purchases of capital expenditures.

Net
cash used in financing activities for the fiscal year ended April 30, 2025 was $9.9 million, of which $9.6 million was related to a special
cash dividend payment of $1.00 per share of common stock paid on August 29, 2024. There was no cash used in financing activities for
the fiscal year ended April 30, 2024.

The
Company will continue to expend resources for R&D to develop, improve and acquire products for space applications, guidance and targeting
systems, and communication systems that management believes will result in future growth and profitability. The Company anticipates securing
additional customer funding for a portion of its R&D activities and will allocate internal funds depending on market conditions and
identification of new opportunities.  The Company expects internally generated cash will be adequate to fund these R&D efforts. 
The Company may also pursue acquisitions to expand its range of products and may use internally generated cash and external funding in
connection with such acquisitions.

During
fiscal year 2025, as in fiscal year 2024, the impact of inflation on the Company’s business was an increases in costs for materials
and services. The Company believes this may continue to impact expenses in fiscal year 2026 and future years.

As
of April 30, 2025, the Company had retained earnings of $3.7 million. The Company believes that its cash, as of April 30, 2025, and cash
flows from operations will provide sufficient liquidity to meet its operating needs in the normal course of business in both the short-term
(next twelve months from the date of issuance of these consolidated financial statements) and in the long-term (beyond the next twelve
months).

RECENT
ACCOUNTING PRONOUNCEMENTS

In
November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expands on the required disclosure of incremental
segment information. The new 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. We adopted the new standard effective April 30, 2025. As a result,
we have enhanced our segment disclosures to include the presentation of cost of revenues by segment and the disclosure of our Chief Operating
Decision Maker (“CODM”). The adoption of this ASU has no material effect on the consolidated financial statements and only
affects our disclosure.

In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”),
which requires companies to annually disclose categories in the effective tax rate reconciliation and additional information about income
taxes paid. The new guidance is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years
beginning after December 15, 2024, with early adoption permitted. The Company is in the process of evaluating the impact that the adoption
of ASU No. 2023-09 will have to the financial statements and related disclosures.

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Table of Contents

OTHER
MATTERS

The
financial information reported herein is not necessarily indicative of future operating results or of the future financial condition
of the Company.

Morion

The
Company has an investment in Morion, a privately-held Russian company, which manufactures high precision quartz resonators and crystal
oscillators. The Company has also licensed certain technology to Morion.

The
Company’s investment consists of 4.6% of Morion’s outstanding shares, accordingly, the Company accounts for its investment
in Morion on a cost basis. During the fiscal year ended April 30, 2025, the Company acquired no product from Morion. During the fiscal
year ended April 30, 2024, the Company acquired product from Morion in the aggregate amount of approximately $89,000. During the fiscal
years ended April 30, 2025 and 2024, the Company sold no product and no training services to Morion, and the Company received no dividends
from Morion.

Due
to the Russia-Ukraine conflict and resulting sanctions, the future status of FEI’s equity investment in Morion is uncertain. In
response to these conditions, in connection with the preparation of the audited financial statements included in the 2022 Form 10-K,
the Company impaired its investment in Morion in full.

Prior
purchases of materials from Morion consisted mainly of quartz crystal blanks, which were used in the fabrication of quartz resonators.
However, on October 30, 2024, the U.S. Department of Treasury’s Office of Foreign Assets Control designated Morion as a Specially
Designated National, resulting in the blocking of all Morion property and property interests. As a result, the Company has terminated
all commercial relationships with Morion, including the licensing of technology to Morion and the purchase of any products from Morion.
The Company has established alternate sources of supply with respect to items previously acquired from Morion. The Company is also capable
of fabricating the crystal blanks in-house.

Morion
is a less than wholly-owned subsidiary of Gazprombank, a state-owned Russian bank. The U.S. Ukraine-related sanctions regime has since
2014 included a list of sectoral sanctions identifications (“SSI”) pursuant to Executive Order 13662, which prohibits certain
transactions, including certain extensions of credit, with an entity designated as an SSI or certain affiliates of an entity designated
as an SSI. On July 16, 2014, after the Company’s investment in Morion, Gazprombank was designated as an SSI.

As
previously disclosed, in light of Morion’s relationship with Gazprombank, in 2020, the Company evaluated, with the assistance of
external legal counsel, certain sales to Morion and the timing of payments by Morion to the Company in connection with those sales to
determine whether payments by Morion may have inadvertently constituted extensions of credit in violation of Directive 1 under Executive
Order 13662. The Company determined that certain payments by Morion – the majority of which occurred more than five years ago –
were not timely. Following the evaluation, on May 7, 2020, the Company voluntarily disclosed its findings to the Office of Foreign Assets
Control (“OFAC”). The Company’s voluntary disclosure to OFAC related solely to delays in collection of accounts receivable
that exceeded then-applicable payment windows set forth in sanctions regulations and did not relate to any other type of payment or transaction.
On February 17, 2021, the Company received a Cautionary Letter from OFAC indicating that OFAC has completed its review of the matter.
According to OFAC, the Cautionary Letter was issued instead of pursuing a civil monetary penalty or taking other enforcement action.