FORM 10-QSB



Quarterly Report Under Section 13 or 15(d) of 
       the Securities Exchange Act of 1934

 For the quarterly period ended July 31, 1998

          Commission File No. 2-33256


          TOROTEL, INC.
(Exact name of small business issuer as 
      specified in its charter)


  MISSOURI                       44-0610086
(State or other            (I.R.S. Employer
 jurisdiction of          Identification No.)
incorporation or 
 organization)


13402 S 71 HIGHWAY, GRANDVIEW, MISSOURI  64030
 (Address of principal executive offices)


                (816) 761-6314
         (Issuer's telephone number)


                   NONE
 (Former name, former address and former 
 fiscal year, if change since last report)


Check whether the issuer (1) filed all reports 
required to be filed by Section 13 or 15(d) of 
the Exchange Act during the past 12 months and 
(2) has been subject to such filing 
requirements for the past 90 days.

         Yes    X     No             


As of September 10, 1998, there were 2,810,985 
shares of Common Stock, $.50 Par Value, 
outstanding.








       TOROTEL, INC. AND SUBSIDIARIES



                  INDEX



PART I.      FINANCIAL INFORMATION

 Item 1.   Financial Statements

  Consolidated Balance Sheet as 
   of July 31, 1998                           

  Consolidated Statements of Operations
    for the three months ended July 31,
    1998 and 1997                             

  Consolidated Statements of Cash Flows 
    for the three months ended July 31,
    1998 and 1997                             

  Notes to Consolidated Financial Statements  

 Item 2.   Management's Discussion and 
            Analysis or Plan of Operation    



PART II.     OTHER INFORMATION

 Item 1.   Legal Proceedings                 

 Item 6.   Exhibits and Reports on Form 8-K  



SIGNATURES                                   





PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

CONSOLIDATED BALANCE SHEET (Unaudited)
As of July 31, 1998

ASSETS

Current assets:
Cash                               $     9,000
Accounts receivable, net             1,505,000
Inventories (Note 3)                 3,224,000
Prepaid expenses and other current 
  assets                               172,000
Asset held for disposal                 76,000
                                     4,986,000

Property, plant and equipment, net   1,517,000

Other assets                            44,000

                                   $ 6,547,000

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Short-term revolving credit
    line (Note 5)                  $ 1,994,000
  Current maturities of 
    long-term debt                     284,000
  Trade accounts payable               904,000
  Accrued liabilities                  462,000
                                     3,644,000

Long-term debt, less current 
  maturities                         1,530,000

Note and interest payable to 
  former officer (Note 6)              448,000

Commitments and contingencies
  (Notes 6, 10 and 11)                 486,000

Stockholders' equity
 (Notes 7, 8, 9 and 10):
  Common stock, at par value         1,441,000
Capital in excess of par value       8,673,000
Accumulated deficit                 (9,470,000)
                                       644,000
Less treasury stock, at cost           205,000
                                       439,000

                                   $ 6,547,000
    The accompanying notes are an integral part
             of these statements.


CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited)
Three Months Ended July 31,


                           1998         1997

Net sales              $ 2,633,000  $ 3,377,000
Cost of goods sold       2,362,000    2,451,000

     Gross profit          271,000      926,000

Operating expenses:
Engineering                202,000      207,000
Selling, general and
  administrative           582,000      604,000
                           784,000      811,000

     Earnings (loss) 
      from operations     (513,000)     115,000

Other expense:
  Interest expense          83,000       67,000
  Other, net                  -          70,000
                            83,000      137,000

     Loss before 
      provision for income
       taxes              (596,000)    (22,000)

Provision for income 
 taxes (Note 4)               -            -  

Net loss              $   (596,000)  $ (22,000)


Basic loss per share
 (Note 7)             $ (.21)        $ (.01)

Diluted loss per 
 share (Note 7)       $ (.21)        $ (.01)



  The accompanying notes are an integral part 
           of these statements.











CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited)
Three Months Ended July 31,


                        1998            1997

Cash flows from 
 operating
 activities:
  Net loss       $     (596,000) $     (22,000)

  Adjustments to reconcile net loss to net cash
   provided by (used in) operations:
     Loss from estimated 
      government penalty   -           70,000
     Depreciation and
      amortization       89,000        85,000
     Increase (decrease)
      in cash flows from operations
       resulting from changes in:
        Accounts 
         receivable       59,000       239,000
        Inventories      (88,000)     (184,000)
        Prepaid 
         expenses and 
         other assets    (85,000)      (64,000)
        Trade accounts
         payable         209,000        72,000
        Accrued 
         liabilities      20,000        64,000

Net cash provided by
 (used in) operating
  activities            (392,000)      260,000

Cash flows from
 investing activities:
  Capital expenditures   (38,000)      (26,000)

Cash flows from
 financing activities:
  Borrowings against
   credit line           948,000       100,000
  Payments against
   credit line          (515,000)     (370,000)
  Principal payments on
   long-term debt        (45,000)      (21,000)
  Payments on capital
   lease obligations      (6,000)       (4,000)
  Note and interest
   payable to former
   officer                10,000           -
  Proceeds from 
   issuance of common
   stock                   1,000         1,000

Net cash provided by
  (used in) financing
  activities             393,000      (294,000)

Net decrease
 in cash           $     (37,000)    $ (60,000)
Cash at beginning
 of year                  46,000       196,000

Cash at end of July$       9,000     $ 136,000


Supplemental Disclosures of Cash Flow 
Information
  Cash paid during the period for:
   Interest        $      73,000     $  55,000
   Income taxes    $          -      $    -

The accompanying notes are an integral part 
          of these statements.











NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)



Note 1 - Basis of Presentation

     The accompanying unaudited consolidated 
financial statements reflect the normal 
recurring adjustments which are, in the opinion 
of management, necessary to present fairly the 
company's financial position at July 31, 1998, 
and the results of operations for the three 
months ended July 31, 1998.
     The financial statements contained herein 
should be read in conjunction with the 
company's financial statements and related 
notes filed on Form 10-KSB for the year ended 
April 30, 1998.


Note 2 - Realization of Assets

     The accompanying consolidated financial 
statements have been prepared in conformity 
with generally accepted accounting principles, 
which contemplate continuation of the company 
as a going concern.  However, the company has 
sustained substantial losses in the first 
quarter of fiscal 1999, and in fiscal years 
1998 and 1997.  In addition, in the first 
quarter of fiscal 1999 and for fiscal year 
1998, the company has used, rather than 
provided, cash in its operations.  The 
company's line of credit with PNBT expires 
December 31, 1998 (see Note 5 of Notes to 
Consolidated Financial Statements).  If the 
bank does not renew the credit line, the entire 
outstanding balance would become due and 
payable.  Although management believes the bank 
has an interest in continuing as the company's 
primary lender, the renewal of the credit line 
will be subject to, among other things, 
satisfactory review of the company's operating 
plans, cash needs, available collateral, and 
status of the possible acquisition (see Note 10 
of Notes to Consolidated Financial Statements).
     In view of the matters described in the 
preceding paragraph, recoverability of a major 
portion of the recorded asset amounts shown in 
the accompanying consolidated balance sheet is 
dependent upon continued operations of the 
company, which in turn is dependent upon the 
company's ability to meet its financing 
requirements on a continuing basis, to maintain 
present financing, and to succeed in its future 
operations.  The consolidated financial 
statements do not include any adjustment 
relating to the recoverability and 
classification of recorded asset amounts or 
amounts and classification of liabilities that 
might be necessary should the company be unable 
to continue in existence.


Note 3 - Inventories

     The components of inventories are 
summarized as follows:

  Raw materials                     $ 1,810,000
  Work in process                     1,004,000
  Finished goods                        410,000

                                    $ 3,224,000


Note 4 - Income Taxes

     The company has net operating loss and 
credit carryforwards available as benefits to 
reduce future income taxes, subject to 
applicable limitations.  These tax credit and 
operating loss carryforwards expire in various 
amounts in the years 1999 through 2013.
     The difference between the financial and 
tax bases of assets and liabilities is 
determined annually.  Deferred income taxes and 
liabilities are computed for those differences 
that have future tax consequences using the 
currently enacted tax laws and rates that apply 
to the periods in which they are expected to 
effect taxable income.  Valuation allowances 
are established, if necessary, to reduce the 
deferred tax asset to the amount that will, 
more likely than not, be realized.  Income tax 
expense is the current tax payable or 
refundable for the period plus or minus the net 
change in the deferred tax assets or 
liabilities.
     The following table summarizes the 
components of the net deferred tax asset:

Net operating loss
 carryforwards                      $ 2,459,000
Inventory valuation reserve             229,000
Tax credit carryforwards                406,000
Property, plant and equipment           106,000
Other                                    52,000
                                      3,252,000
Less valuation allowance              3,252,000

                                    $     -

Note 5 - Short-term Revolving Credit Line

     The company has renewed its revolving 
credit agreement with Phillipsburg National 
Bank & Trust Company (PNBT) through December 
31, 1998.  At the present time, the agreement 
provides a $2,500,000 revolving credit line; 
however, this amount will be reduced to 
approximately $1.3 million upon closing of the 
product line sale discussed in Note 11 of Notes 
to Consolidated Financial Statements.  The 
company is negotiating with the bank to 
increase the maximum limit to $1.7 million.
     Advances under the credit line are limited 
to the sum of 75% of eligible billed 
receivables and 50% of inventories, net of 
reserves.  The revolving credit line is 
collateralized by trade accounts receivable, 
inventories, and a third lien mortgage on OPT's 
facility.  Under the terms of the agreement, 
the outstanding balance of the revolving line 
bears interest at 1/2% over the bank's prime 
lending rate.  As of July 31, 1998, the company 
had utilized $1,994,000 of the revolving credit 
line and the effective borrowing rate was 9%.  
The company is required to comply with certain 
covenants including restrictions on the payment 
of cash dividends.  As of July 31, 1998, the 
company was in violation of three financial 
covenants under the terms of the previous 
credit agreement with PNBT; however, the bank 
previously had waived compliance with the 
subject provisions through August 31, 1998, 
which was the expiration date of the previous 
credit line.


Note 6 - Contingency for Estimated Penalty

     On May 6, 1997, Torotel Products, Inc. was 
accepted into the Voluntary Disclosure Program 
of theUnited States Department of Defense, 
resulting from its failure to perform some 
required "thermal shock" testing as frequently 
as required, and inaccurately certifying that 
all required testing had been performed.  As a 
result of the company's investigation into the 
thermal shock deficiencies, which was first 
reported in November 1996, the company recorded 
an estimated charge of $416,000 against 
earnings in the fourth quarter of its fiscal 
year ended April 30, 1997.  Because the 
investigation was ongoing, the company 
subsequently determined that there also were 
some deficiencies in performing some required 
electrical testing as frequently as required.  
As a result, the company recorded an additional 
estimated charge of $70,000 against earnings in 
the first quarter of its fiscal year ended 
April 30, 1998.  The company does not 
anticipate incurring any additional major 
charges related to the investigation; however, 
the aggregate amount of the estimated penalty 
is still subject to fluctuation as further 
evidence is investigated.
     At this time, the company is not certain 
when payment of the damage amount will be 
required; however, the company does not 
anticipate making any payments during the next 
twelve months.  As a result, the entire 
$486,000 has been classified as a long-term 
liability in the accompanying consolidated 
balance sheet.
     The company believes that certain of its 
former officers may have been responsible for 
the misconduct related to the test failures, 
and will evaluate ways of recovering the 
damages once the government completes its 
investigation.  In the meantime, the company 
has suspended all principal and interest 
payments due under a note payable to a former 
officer, and does not anticipate making any 
further payments during the next twelve months.  
As a result, as of July 31, 1998, the aggregate 
amount due of $448,000, which consists of the 
outstanding principal of $384,000 plus the 
accrued interest of $64,000, has been 
classified as a long-term liability in the 
accompanying consolidated balance sheet.
     The legal fees associated with the DOD 
investigation have amounted to $1,000 during 
the current fiscal year, and $272,000 in 
aggregate since the investigation started in 
the third quarter of the fiscal year ended 
April 30, 1997.


Note 7 - Earnings Per Share

     In February 1997, the FASB issued 
Statement of Financial Accounting Standards 
(SFAS) No. 128, Earnings per Share, which 
replaces the presentation of primary earnings 
per share (EPS) with a presentation of basic 
EPS; requires dual presentation of basic and 
diluted EPS on the face of the statement of 
earnings regardless of whether basic and 
diluted EPS are the same; and requires a 
reconciliation of the numerator and denominator 
used in computing basic and diluted EPS.  Basic 
EPS excludes dilution and is computed by 
dividing earnings available to common 
stockholders by the weighted average number of 
common shares outstanding for the period.  
Diluted EPS is computed similarly to fully 
diluted EPS pursuant to APB Opinion 15.  
Diluted EPS reflects the potential dilution 
that could occur if securities or other 
contracts to issue common stock were exercised 
or converted into common stock or resulted in 
the issuance of common stock that then shared 
in the earnings of the entity.  The statement 
became effective for financial statements 
issued for periods ending after December 15, 
1997, and requires restatement of all prior-
period EPS data presented.
     Pursuant to the new statement, the basic 
and diluted loss per common share were computed 
as follows:

                          1998          1997

Net loss          $    (596,000) $     (22,000)
Weighted average
 common shares
 outstanding          2,810,985      2,808,268
Incremental shares       -               -     
Basic loss
  per share      $        (.21)  $       (.01)
Diluted loss
  per share      $        (.21)  $       (.01)


No incremental shares are included in the EPS 
calculations due to the net loss in each of the 
quarterly periods.


Note 8 - Employee Stock Options

     Employee stock options are accounted for 
under APB Opinion 25, Accounting for Stock 
Issued to Employees, and related 
interpretations.  The exercise price of each 
option equals the market price of the company's 
common stock on the date of grant.  
Accordingly, no compensation cost has been 
recognized.  The company chose not to adopt 
Statement of Financial Accounting Standards No. 
123, Accounting for Stock-Based Compensation.  
The fair value of the options under SFAS No. 
123 is approximately $70,000 which is not 
deemed significant to earnings.


     Stock option transactions under the 1994 
Incentive Compensation Plan for each period are 
summarized as follows:

                   1998                1997
           Weighted           Weighted
            Shares    Average  Shares   Average  
             Under             Under
            Exercise          Exercise  
             Option   Price    Option    Price
Outstanding
 at beginning
 of year    150,000   $1.00    150,000    $1.00  
Granted        -        -         -         -     
Exercised      -        -         -         -        
Forfeited      -        -         -         -        
Outstanding
 at end of
 July       150,000   $1.00    150,000    $1.00  


Options
 exercisable
 at end
 of July       -        -         -         -       
Weighted
 average
 fair value
 of options
 granted
 during the
 year          -        -         -         -       

The following information applies to options 
outstanding at July 31, 1998:

Number outstanding                      150,000
Range of exercise prices                  $1.00
Weighted average exercise price           $1.00
Weighted average remaining contractual
 life                                 7.4 years


Note 9 - Stock Warrants

     Pursuant to a settlement that ended a 
class action alleging racial discrimination in 
hiring by Torotel Products, Inc., the company 
agreed to issue a warrant certificate to the 
Torotel Settlement Fund to purchase 100,000 
shares of Torotel, Inc. common stock at $.75 
per share.  The warrant is 100% vested upon 
issuance and cannot be exercised until the 
market price of the company's common stock 
reaches $2.00 per share.  The warrant expires 
on May 4, 2003.
The warrant is deemed non-compensatory under 
Statement of Financial Accounting StandardsNo. 
123, Accounting for Stock-Based Compensation.  
Stock warrant transactions for each period are 
summarized as follows:

1998                1997
           Weighted           Weighted
            Shares    Average  Shares   Average  
             Under             Under
            Exercise          Exercise  
             Option   Price    Option    Price
Outstanding
 at beginning
 of year        -       -        -         -      
Granted     100,000  $  .75      -         -      
Exercised       -       -        -         -      
Forfeited       -       -        -         -      
Outstanding
 at end of
 July       100,000  $  .75      -         -      


Warrants
 exercisable
 at end of
 July           -       -        -         -       
Weighted 
 average
 fair value
 of warrants
 granted
 during the
 year           -       -        -         -       

The following information applies to warrants 
outstanding at July 31, 1998:

Number outstanding                     100,000
Range of exercise prices                $  .75
Weighted average exercise price         $  .75
Weighted average remaining
 contractual life                    4.75 years


Note 10 - Acquisition

     On July 24, 1998, the company entered into 
a letter of intent for a possible business 
combination with Caloyeras, Inc., d/b/a 
Electronika, Inc. (which also will include the 
business and assets of its affiliate, 
Magnetika/East).  This manufacturer of magnetic 
components had net sales of $1.8 million, and 
normalized and adjusted pretax profits of 
$575,000 for its last fiscal year.  These are 
unaudited results provided by Caloyeras, Inc.  
In connection with this business combination, 
Torotel, Inc. would exchange 1.8 million shares 
of its common stock, and $2.5 million of a new 
class of preferred stock (5 percent cumulative, 
non-participating), for 100 percent of the 
outstanding securities of Caloyeras, Inc.  In 
addition, the founder's family shareholders of 
Torotel, Inc. would form a voting trust or 
similar arrangement, pursuant to whichPeter B. 
Caloyeras would be allowed to vote 525,165 
shares of common stock of Torotel, Inc. owned 
by the Sizemore family.  As a result of these 
transactions, the Caloyeras family would 
acquire more than 50 percent of the voting 
control of Torotel, Inc.  This transaction is 
subject to, among other things, due diligence, 
the negotiation and execution of definitive 
agreements, and the approval of Torotel, Inc.'s 
shareholders.  There can be no assurance that 
the parties will consummate the transaction 
contemplated by the letter of intent.


Note 11 - Product Line Sale

On August 13, 1998, the company entered into a 
definitive agreement with Pico Electronics, 
Inc. of Pelham, New York, which will purchase 
an ultra-miniature transformer and inductor 
product line from Torotel's wholly-owned 
subsidiary, OPT Industries, Inc.,  for a cash 
price of $1.25 million.  The closing on the 
transaction is scheduled for September 18, 
1998.
























Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS
           OR PLAN OF OPERATION



     The discussion and analysis of the results 
of operations includes the operations of 
Torotel, Inc., and its subsidiaries, Torotel 
Products, Inc. and OPT Industries, Inc.


THREE MONTHS ENDED JULY 31, 1998 VERSUS THREE 
MONTHS ENDED JULY 31, 1997

     Net sales decreased 22%.  The net sales of 
Torotel Products increased slightly from 
$1,576,000 to $1,592,000.  OPT's net sales 
decreased 42% from $1,801,000 to $1,041,000 due 
primarily to lower sales of power supplies to a 
major customer.  No significant orders are 
expected from this customer at this time.  OPT 
did receive over $1.0 million in orders for its 
new power supplies products during the quarter 
ended July 31, 1998, which will contribute to 
higher sales in the second half of fiscal 1999.
     Gross profit as a percentage of net sales 
decreased 17%.  The gross profit percentage of 
Torotel Products decreased 13% due primarily to 
labor inefficiencies.  The gross profit 
percentage of OPT decreased 27% due to labor 
inefficiencies and lower sales volume without a 
comparable decrease in fixed production costs.
     Engineering expenses decreased 2%.  The 
engineering expenses of Torotel Products 
decreased 12% from $73,000 to $64,000 due 
primarily to a $4,000 decrease in equipment 
rental costs, a $2,000 decrease in payroll 
costs, a $2,000 decrease in training costs, and 
a $1,000 decrease in travel costs.  The 
engineering expenses of OPT increased 3% from 
$134,000 to $138,000 due primarily to $2,000 
increase in recruiting costs and a $2,000 
increase in costs for equipment repairs and 
maintenance.
     Selling, general and administrative (SG&A) 
expenses decreased 4%.  The SG&A expenses of 
Torotel, Inc. decreased 17% from $53,000 to 
$44,000 due primarily to a $5,000 decrease in 
directors fees and a $4,000 decrease in 
professional fees.  The SG&A expenses of 
Torotel Products decreased 4% from $299,000 to 
$287,000 due primarily to a $33,000 decrease in 
professional fees, a $4,000 decrease in sales 
commissions.  These decreases were offset 
partially by a $12,000 increase in payroll 
costs, a $6,000 increase in hazardous waste 
disposal costs, a $5,000 increase in utilities 
costs and a $2,000 increase in costs for 
equipment repairs and maintenance.  The SG&A 
expenses of OPT decreased slightly from 
$252,000 to $251,000.
     Interest expense increased 24%.  The 
interest expense of Torotel, Inc. remained 
unchanged at $10,000.  The interest expense of 
Torotel Products increased 45% from $29,000 to 
$42,000 due to a higher aggregate borrowing 
level.  The interest expense of OPT increased 
11% from $28,000 to $31,000 due to a higher 
aggregate borrowing level.
     Sundry non-operating expense decreased due 
to a $70,000 charge in the quarter ended July 
31, 1997, for an estimated penalty as discussed 
in Note 6 of Notes to Consolidated Financial 
Statements.
For the reasons discussed above, the 
consolidated pretax loss increased from $22,000 
to $596,000.  The pretax loss of Torotel, Inc. 
decreased from $63,000 to $54,000.  The pretax 
loss of Torotel Products increased from a 
profit of $49,000 to a loss of $75,000.  The 
pretax loss of OPT increased from $8,000 to 
$467,000.

LIQUIDITY AND CAPITAL RESOURCES

     Historically, the company has relied on 
funds generated internally and bank borrowings 
to meet its normal operating requirements and 
to service bank indebtedness.  For the fiscal 
year ended April 30, 1998, the company incurred 
a pretax loss of $1,295,000.  For the three 
months ended July 31, 1998, the company 
incurred an additional loss of $596,000.  
Management does not anticipate any substantial 
increase in the present rate of sales during 
the next few months.  As a result, further 
operating losses are likely; however, these 
losses will be offset by an anticipated gain 
from the product line sale discussed in Note 11 
of Notes to Consolidated Financial Statements.  
As of July 31, 1998, the company was in 
violation of three financial covenants under 
the terms of the previous credit agreement with 
PNBT (see Note 5 of Notes to Consolidated 
Financial Statements); however, the bank 
previously had waived compliance with the 
subject provisions through August 31, 1998, 
which was the expiration date of the revolving 
credit line.  PNBT has renewed the company's 
line of credit through December 31, 1998.  At 
the present time, the agreement provides a line 
of credit of $2,500,000; however, this amount 
will be reduced to approximately $1.3 million 
upon closing of the product line sale 
referenced above.  The company is negotiating 
with the bank to increase the maximum limit to 
$1.7 million.  In addition, PNBT will review 
the entire credit arrangement upon signing of a 
definitive agreement with Caloyeras, Inc. (see 
Note 10 of Notes to Consolidated Financial 
Statements).  While the bank has expressed a 
willingness to continue as the company's 
primary lender, the renewal of the credit line 
will be subject to, among other things, 
satisfactory review of the company's operating 
plans, cash needs, available collateral, and 
status of the possible acquisition of 
Caloyeras, Inc.  If the bank decides not to 
renew the credit line, it could affect the 
company's ability to continue as a going 
concern (see Note 2 of Notes to Consolidated 
Financial Statements).  While the company may 
be able to find an alternate source for 
financing, most likely it would be short-term 
in nature, carry substantially higher costs and 
lending rates, and be much more restrictive for 
liquidity purposes.
     During the three months ended July 31, 
1998, the company's operating activities used 
$392,000 in cash flow.  Corporate related 
matters used $57,000.  The operations of 
Torotel Products provided $312,000 in cash flow 
due primarily to a lower level of receivables 
and inventories, and a higher level of 
payables.  OPT's operations used $647,000 in 
cash flow due primarily to pretax losses, and a 
higher level of receivables and inventories.
     Investing activities used $38,000 in cash 
flow for capital expenditures for production 
equipment and building improvements.  The 
company expects investments of approximately 
$125,000 for capital expenditures in fiscal 
1999.
     Financing activities provided $393,000 in 
cash flow due primarily to increased borrowings 
against the revolving credit line.  At July 31, 
1998, the company had used $1,994,000 of its 
revolving credit line and had $506,000 
available for future cash requirements, based 
on the lender's borrowing base formula.
     The company believes that inflation will 
have only a minimal effect on future operations 
since such effects will be offset by sales 
price increases which are not expected to have 
a significant effect upon demand.

Year 2000 Readiness

     Management is presently assessing both 
operating companies for their Year 2000 
readiness.  Extensive testing has been 
performed on the main operating system and its 
software applications (which serves both 
operating companies), and it has been 
determined that both are Year 2000 compliant.  
Both operations now are in the process of 
polling significant suppliers and customers to 
determine the extent to which either operation 
is vulnerable to those third parties' failure 
to remediate their own Year 2000 issues.  In 
addition, various equipment is being tested to 
verify its Year 2000 functionality.  The cost 
of these efforts has been and should continue 
to be minimal.
     The company believes all necessary steps 
are being taken to assure a smooth transition 
to the Year 2000.  However, there is no 
guarantee that the systems of major suppliers 
and customers will be timely converted and 
would not have a material adverse effect on the 
company.


Other

     Except for historical information 
contained herein, certain of the matters 
discussed above are forward-looking statements 
within the meaning of the Private Securities 
Litigation Reform Act of 1995, and are subject 
to the safe harbor created by that Act.  These 
statements are based on assumptions about a 
number of important factors and involve risks 
and uncertainties that could cause actual 
results to be different from what is stated 
here.  These risk factors include:  decreased 
demand for products, delays in developing new 
products, expected orders that do not occur, 
loss of key customers, and the DOD calling for 
payment of the accrued penalty and assessing 
additional fees, the impact of competition and 
price erosion as well as supply and 
manufacturing constraints, and other risks and 
uncertainties.














          PART II.   OTHER INFORMATION



Item 1.   Legal Proceedings

     There is one legal proceeding involving 
the company.  On May 6, 1997, Torotel Products, 
Inc. was accepted into the Voluntary Disclosure 
Program by the Inspector General of the United 
States Department of Defense, resulting from 
its failure to perform some required testing as 
frequently as required, and inaccurately 
certifying that all required testing had been 
performed.  As a result of the company's 
investigation into the testing deficiencies, 
the company has recorded an estimated charge of 
$486,000 against earnings.  The estimated 
penalty is still subject to fluctuation as 
further evidence is investigated.  The company 
believes that certain of its former officers 
may have been responsible for the misconduct 
related to the test failures, and will evaluate 
ways of recovering the damages once the 
government completes its investigation.  In the 
meantime, the company has suspended all 
payments under a note payable to a former 
officer.


Item 6.   Exhibits and Reports on Form 8-K

     a) Exhibit 27 -- Financial Data 
         Schedule (electronic filings 
         only)
     b) Reports on Form 8-K -- There was one 
        report filed on Form 8-K during the 
        three months ended July 31, 1998.  The 
        report was dated July 29, 1998, and 
        included information on the possible 
        merger with Caloyeras, Inc. d/b/a 
        Electronika, Inc. (which will also 
        include the business and assets of its 
        affiliate, Magnetika/East), as required 
        by Item 5 of Form 8-K.













                SIGNATURES



     In accordance with the requirements of the 
Securities Exchange Act of 1934, the Registrant 
caused this report to be signed on its behalf 
by the undersigned, thereunto duly authorized.


Torotel, Inc.
(Registrant)




Date: September 11, 1998  /s/  H. James Serrone
                          H. James Serrone
                          Vice President of 
                           Finance and Chief 
                           Financial Officer