FORM 10-K


                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549


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

For the fiscal year ended December 31, 1997   Commission File Number  0-13433


                             MILTOPE GROUP INC.
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        (Exact name of registrant as specified in its charter)

                 DELAWARE                            11-2693062
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(State or other jurisdiction of incorporation     (I.R.S. Employer
              or organization)                    Identification No.)

   500 Richardson Road South, Hope Hull, Alabama            36043
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  (Address of principal executive offices)                (Zip Code)

Registrant's telephone number including area code:  (334) 284-8665

Securities registered pursuant to Section 12(b) of the Act:  None

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

                  Common Shares, par value $.01 each
                  ----------------------------------
                           (Title of class)

      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  X       No
          -----       -----
     Indicate by check mark if disclosure of delinquent filers pursuant
to  Item 405 of Regulation S-K is not contained herein, and will not be
contained,  to  the best of the registrant's knowledge,  in  definitive
proxy  or information statements incorporated by reference in Part  III
of this Form  10-K or any amendment to this Form 10-K.  [     ]

      The  aggregate market value of the voting stock of the registrant
held  by  non-affiliates (which excludes voting shares held by officers
and directors of the registrant) was $7,026,495 as of February 2, 1998.

      Indicate  the  number  of  shares  outstanding  of  each  of  the
registrant's classes of common stock:  Common Shares with a  par  value
of $.01 each:  5,871,523 as of February 2, 1998.

     Documents Incorporated by Reference:

The  definitive Proxy Statement for the Annual Meeting of  Stockholders
to  be  held June 11, 1998, to be filed with the Commission  not  later
than 120 days after the close of the Registrant's fiscal year, has been
incorporated by reference in whole or in part for Part III,  Items  10,
11, 12 and 13, of the December 31, 1997 Form 10-K.


<PAGE>

ITEM 1. BUSINESS
        --------
General
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     Miltope   Group  Inc.  (the  "Company"),  a  Delaware  corporation
incorporated  in  March  1984,  is  the  parent  company   of   Miltope
Corporation,  an Alabama corporation ("Miltope"), and Miltope  Business
Products, Inc., a New York corporation ("MBP").  Miltope was originally
incorporated  as a New York corporation in 1975 to acquire  the  assets
and  business  of the Military Equipment Division of Potter  Instrument
Company,  Inc.  and  until June 1984 was a wholly owned  subsidiary  of
Stonebrook Group Inc. (formerly Stenbeck Reassurance Co. Inc.) ("SGI").
In June 1984, all of the outstanding stock of the Company was issued to
SGI in exchange for all of the outstanding stock of Miltope.  SGI is  a
privately  held  corporation  which,  since  1975,  has  supported  the
formation  and  funding  of companies engaged in  the  development  and
manufacture  of  electronic  hardware for  defense  and  communications
applications   and  in  communications  services.   In  January   1985,
shareholders of the Company (including SGI) sold 700,000 shares of  the
Company's  Common  Stock in an initial public  offering.   In  November
1985,  the  Company sold an additional 1,000,000 shares of  its  Common
Stock to the public.  As of December 30, 1994, Miltope merged with  and
into a newly formed Alabama corporation, which succeeded to all of  the
New  York  corporation's assets and liabilities.  On January  1,  1995,
Innova  International  Corporation,  a  Delaware  corporation  ("IIC"),
acquired 62.8% of the outstanding shares of Common Stock of the Company
pursuant to certain share exchange transactions with SGI, which at such
time was a holder of 55.6% of the outstanding shares of common stock of
the Company, and Stuvik AB, a Swedish corporation and, at such time,  a
holder  of  approximately  7.2% of the outstanding  shares  of  Company
common  stock.   IIC  provides,  through  its  operating  subsidiaries,
integrated network products and services.  IIC is a subsidiary of Great
Universal  Incorporated, a Delaware corporation  which  is  engaged  in
system integration services, outsourcing services and the provision  of
satellite television programming.

     Miltope  is  engaged in the design, development,  manufacture  and
testing  of  computers and computer peripheral equipment for  military,
rugged and other specialized applications requiring reliable operations
in  severe  land, sea and airborne environments for both  military  and
commercial customers.  Miltope's product lines include a broad range of
computer  printers, disk memory products, transportable  microcomputers
and  electronically erasable programmable read only  memory  ("EEPROM")
together  with subsystems incorporating these products.   Miltope  also
delivers  components  for cabin management and in flight  entertainment
systems,  public  access Internet terminals, and  a  complete  line  of
rugged   SUN   and  Hewlett-Packard  RISC  workstations   and   related
peripherals.

     In  September  1994, the Company relocated its  headquarters  from
Melville, New York to Montgomery, Alabama.

     On January 12, 1995, the Company completed a $6,100,000 industrial
revenue  bond  offering  by  the Alabama State  Industrial  Development
Authority  ("SIDA"), the proceeds of which were used to improve,  equip
and  furnish  the  new Montgomery facility and to  pay  the  $3,375,000
principal  amount of bank indebtedness which was used in  part  in  the
acquisition of such facility.

     On  January  1, 1996, the Company consolidated  the operations  of
MBP  and Miltope Corporation.  The Company's two industry segments  are
maintained through product line accountability.

Segment Information
-------------------
     The Company's business is divided into two industry segments,
consisting of the manufacture of militarized and rugged equipment
primarily for military applications conducted by the "Military/Rugged"
segment, and the manufacture and distribution of commercial products
conducted by the "Commercial" segment (formerly MBP).  Financial
information regarding the Company's industry segments is included in
Note 10 to the Notes to Consolidated Financial Statements located in
Item 8 of this Form 10-K.

Description of Business
-----------------------
Military/Rugged - General
-------------------------
     The military/rugged segment is engaged in the design, development,
manufacture  and testing of computer and computer peripheral  equipment
for  military,  rugged  and  other specialized  applications  requiring
reliable  operations in severe land, sea and airborne environments  for
military  customers.   Military/rugged product lines  include  a  broad
range  of  computer  printers,  disk memory  products,  hand  held  and
transportable microcomputers, and EEPROM solid state memories, together
with  subsystems incorporating these products.  In 1988,   the  Company
introduced a complete line of rugged Hewlett Packard Company  computers
and  related peripherals.  The equipment is being used for  the  United
States  Army's  Tactical  Command  and Control  System/Common  Hardware
Software Program ("ATCCS/CHS") under a contract awarded to the  Company
in August 1988, as well as to other customers for related applications.

     During  1995,  the  Company introduced  a  new  family  of  rugged
computer  products  consisting of hand held Intel based  computers  and
portable   SUN  and  Hewlett-Packard  RISC  workstations  and   related
peripherals.   These new products are reconfigurable and scaleable  for
specific applications and employ commercial "off the shelf" technology.
The  hand  held  Intel based computers are being used  for  the  United
States Army's Soldiers' Portable On-system Repair Tools ("SPORT") under
a  contract  awarded to the Company in June 1996, as well as  by  other
customers  for  related  applications. The portable  SUN  and  Hewlett-
Packard  RISC  workstations  comprise the Transportable  RISC  Computer
("TRC")  2000 product line and are being used for a variety of military
and commercial applications.

     Substantially all of the military/rugged segment sales consist  of
militarized  and rugged products.  "Militarized" equipment is  designed
and built, with respect to each component and the whole, to conform  to
stringent  United  States Department of Defense ("DOD")  specifications
developed  for  severe  land, sea and airborne operating  environments.
These  specifications  define equipment operating parameters  including
atmosphere,  temperature and humidity conditions, permitted  levels  of
shock  and  vibration, susceptibility to electro-magnetic  interference
("EMI"),  EMI emission levels, and detection and hardening for  nuclear
survivability.  "Rugged" equipment is designed and manufactured to less
demanding specifications and may include commercially available devices
which are suitably modified for these applications.

     Production of equipment conforming to these DOD specifications has
required  the development over the years by the Company of  proprietary
electronic  and  electro-mechanical designs and engineering  techniques
and specialized manufacturing and testing methods.  By these means, the
Company  has  developed a broad range of proprietary  components  which
meet  these  specifications  and  are  otherwise  unavailable  in   the
commercial  market.   To  support  its engineering,  manufacturing  and
testing  activities, the Company has extensive manufacturing equipment,
clean  rooms  and reliability and environmental testing  facilities  as
well  as a multi-function computer aided design ("CAD") system  and  an
EMI test lab.

     Military/rugged  products are sold for use in  a  broad  range  of
military  programs  for  the United States Air Force,  Army,  Navy  and
Marine  Corps, for NATO, for the Australian, British, Canadian, French,
German,  Israeli, Italian, Spanish and Norwegian armed forces  and  for
the  armed forces of other countries.  Miltope's militarized and rugged
computers  and   peripheral products are compatible with most  standard
military  computers and are sold to the DOD and many prime DOD  systems
contractors and integrators, including  Amtech Corporation,  Bath  Iron
Works, Boeing Aerospace, EDS, Raytheon E-Systems Inc., Northrop Grumman
Corporation,  GTE Corp., Government Technology Services,  Inc.  (GTSI),
General  Dynamics,  Hughes  Defense  Communications,  Lockheed  Martin,
ManTech  Test  Systems,  Inc., Marconi Radar Control  Systems  Limited,
McDonnell Douglas Corp., Motorola Inc., Loral Federal Systems, Teledyne
Controls, CAE Inc., and ITT Defense Systems.

     Miltope  believes  that it has captured a  major  portion  of  the
market for militarized printers and disk memory products.  In addition,
Miltope  is  recognized as a leading supplier of rugged  computers  and
related  equipment.  A key element of Miltope's strategy  has  been  to
develop  and  deliver  a  broad  range of high  reliability  peripheral
components  and  systems on a cost effective  and  timely  basis.   The
breadth  of  Miltope's product offerings enables system integrators  to
avoid  the  risks normally encountered when procuring peripherals  from
multiple   suppliers  and  to  achieve  significant  price  advantages.
Miltope's ability to meet the diverse requirements of its customers has
resulted  in substantial recurring business.  Also, as defense  budgets
have  been  reduced, an emphasis on commercially adaptable  electronics
and  the  requirement  for smaller, less expensive  and  more  portable
systems  has  occurred.   Miltope believes its new  product  family  of
rugged,  reconfigurable  portable and handheld computing  devices  will
serve this growing market niche well as evidenced by the DOD's award to
Miltope  of  the SPORT Program in June 1996 and the award of  the  TETS
(Third Echelon Test Set) program in October 1997.

     Miltope has been performing under a nine year  DOD contract  which
runs  until August 1998 in connection with the ATCCS/CHS Program.   The
purpose of the ATCCS/CHS Program is to integrate most of the aspects of
land  combat  through  the common automation  of  mission  command  and
control  areas.   As  of  February 2, 1998,  Miltope  has  been  issued
cumulative firm orders valued at approximately $290,000,000  since  the
inception  of  this  contract.  In addition, the Company  has  received
orders  for  ATCCS/CHS  equipment for  other  defense  contractors  and
foreign governments.

     In  June  1996, Miltope was awarded a five year DOD  contract  for
Soldiers' Portable On-system Repair Tools (SPORT).  SPORT will  enhance
the  U.S.  Army's capability to diagnose and repair weapon systems  and
electronically display technical manuals.  Production deliveries  under
this  contract began in September, 1997.  The contract has an estimated
value  of  approximately $81,000,000 over a five  year  period.  As  of
February  2,  1998,  Miltope  has been issued  firm  orders  valued  at
approximately $8,150,000 under this contract.  In addition, the Company
has received orders for SPORT equipment for other defense contractors.

     In   July   1997,  Miltope  was  awarded  additional   orders   of
approximately  $3,300,000 from the U.S. Navy for  the  manufacture  and
delivery  of  SuperBobcat  computers.   These  computers  are   rugged,
powerful  workstations designed and used to support naval  aircraft  in
gathering  signal  intelligence  for  threat  identification.   As   of
February  2,  1998, Miltope has received firm orders  of  approximately
$7,900,000  from this customer since the inception of  the  program  in
June of 1996.

     In  October  1997, the Company was selected to supply its  Prowler
computer  to  fulfill a contract awarded by ManTech Test Systems,  Inc.
The  Prowler is a rugged, portable, Intel based computer developed  and
manufactured  by  Miltope.   The  unit will  serve  as  the  instrument
controller  for  the  U.S.  Marines' Third Echelon  Test  Set  ("TETS")
program.  TETS will provide the Marines with a portable test capability
to screen, test and diagnose electronic and electromechanical equipment
in  the field.  The estimated contract value is $9,500,000 over a  five
year  period.  As of February 2, 1998, Miltope has received firm orders
of approximately $300,000.

Commercial - General
--------------------
     The   commercial  segment  develops,  manufactures   and   markets
commercial  products  primarily for transportation,  telecommunications
and  in-field maintenance markets.  Its products are airborne printers,
airline  ticket  and  boarding  pass  printers,  rugged  public  access
Internet  terminals,  mass storage devices, and derivatives  of  rugged
hand   held  Intel  based  computers  and  portable  RISC  workstations
originally   developed  for  military  applications.   This   segment's
business  represented approximately 48% of the Company's 1997 revenues,
approximately 33% of the Company's 1996 revenues and approximately  15%
of the Company's 1995 revenues.

     Miltope's  airborne printer products are sold to a broad  base  of
airframe  manufacturers and commercial airline companies worldwide  for
use  in  flight deck and cabin workstation information systems.  During
1997,  customers  for  the airborne printer line of  products  included
Boeing Aerospace, Continental Airlines, Delta Airlines, KLM, Matsushita
Avionics  Systems, Teledyne Controls and AMR Eagle, Inc..  Miltope  has
received  firm  orders  during  1997, of approximately  $5,600,000  for
airborne printer products.

     During  1997,  Miltope received firm orders from an affiliate,  3C
Communications     International,    S.A.,    a    Luxembourg     based
telecommunications company, amounting to approximately $8,100,000,  for
the   manufacture  and  delivery  of  rugged  Internet  terminals   for
commercial   use   in  Europe.  These  terminals  are  designated   for
installation  in hotels, transportation centers, restaurants,  etc.  to
provide  Internet access for the traveling public. As  of  February  2,
1998,  Miltope  has  received cumulative firm orders  of  approximately
$11,800,000 from this customer since July 1996.

     In   December  1996,  Miltope  was  awarded  a  contract  for  the
manufacture  of  rugged hard drives for use in Sony  Trans  Com  Inc.'s
Audio  Video on Demand In-Flight Entertainment System  ("P@ssport  TM")
to  be  sold  to  airline customers around the  world.   The  estimated
contract  value  is $10,200,000 over a five year period.  The  contract
value is based on the customer's best estimate of purchase requirements
during  the contract period.  There can be no assurances this  estimate
of  purchase  requirements will be achieved. As of  February  2,  1998,
Miltope  has received firm orders of approximately $200,000  from  this
customer for this product.

     In  October 1997, Miltope was awarded an additional contract  from
Sony  Trans Com, Inc., for an estimated value of $6,000,000 over a five
year  period to develop and manufacture computer units for  the  P@VEST
Family  of  Programmable In Flight Entertainment Systems.  The  Miltope
developed computer unit will provide an interactive capability to  Sony
Trans  Com,  Inc.'s in-flight audio/video, passenger entertainment  and
information systems. The contract value is based on the customer's best
estimate  of  purchase requirements during the contract period.   There
can  be  no assurances this estimate of purchase requirements  will  be
achieved.  As of February 2, 1998, Miltope has received firm orders  of
approximately $100,000 from this customer for this product.

     In  December 1997, Miltope entered into a strategic agreement with
Honeywell,  Inc.  Business and Commuter Aviation  Systems,  to  provide
Maintenance  Access  Terminals ("MAT") for use  in  business  jets  and
commuter  aircraft  around  the  world  as  an  option  on  Honeywell's
integrated  avionics  systems.  As of February  2,  1998,  Miltope  has
received firm orders of approximately $1,000,000 for this product  from
this customer.

Sales and Significant Customers
-------------------------------
     Sales  in 1997 attributable to the military industry segment  were
approximately as follows: 53% from large DOD programs (each  accounting
for 5% or more of annual sales), 17% from smaller programs and sales of
standard  items  in  Miltope's catalogue, 23%  from  sales  to  foreign
governments  and  defense contractors and 7% from  spare  parts  sales.
Sales to any one large DOD program have varied substantially from  year
to year due to product cycles and DOD requirements.

     In  1997, sales to the DOD accounted for 39% of net sales  of  the
Company.  Sales  to  3C Communications International,  S.A.  an  entity
affiliated through certain common ownership, accounted for 26%  of  net
sales.  No other customer accounted for more than 10% of net sales.

     The  Company has experienced large fluctuations from year to  year
in  the percentage of sales represented by particular customers due  to
product  cycles  and  customer requirements. The Company  believes  its
customers  and  the industry are moving to shorter lead  times  due  to
compressed technology cycles and changes in procurement strategies.

     Sales  in  1997  attributable to the commercial  industry  segment
amounted to approximately 48% of the Company's total net sales.

Government Contracts
--------------------
     Miltope's business is subject to various statutes, regulations and
provisions   governing  defense  contracts  including  the   Truth   in
Negotiations  Act,  which  provides for the  examination  by  the  U.S.
government  of  cost  records  to determine  whether  accurate  pricing
information was disclosed in connection with government contracts.

     Contracts with the U.S. government as well as with U.S. government
prime  contractors are typically at a fixed price with a delivery cycle
of  4  to 12 months, with contracts under any particular program  being
subject   to  further  funding  and  negotiation.   Miltope's   defense
contracts  contain customary provisions permitting termination  at  any
time  at the convenience of the customer and providing for payment  for
work-in-progress should the contract be canceled.

Backlog
-------
     Backlog for both the military and commercial industry segments  at
December 31, 1997 was $14,302,000, an 18% decrease from the $17,400,000
backlog at December 31, 1996.

     Backlog includes only customer signed delivery orders from current
contracts  and  funded  portions of multi-year contracts.  The  Company
believes  that  substantially all of the backlog will be recognized  as
revenue  by  December  31,  1998.  The Company  also  believes  that  a
substantial part of new delivery orders and contract fundings  received
in  1998  will be recognized as revenue in the same year due to shorter
lead times.

     Backlog for the commercial industry segment was approximately  28%
of  the total backlog at December 31, 1997 and approximately 47% of the
total backlog at December 1996.

     Backlog   does   not  include  unfunded  portions  of   multi-year
contracts.    Unfunded   portions  of  multi-year   contracts   totaled
$101,700,000   and  $100,000,000  at  December  31,  1996   and   1997,
respectively.

Competition
-----------
     Both  of  the Company's industry segments face intense competition
in  markets  for  certain  of their products.  Competition  comes  from
independent  producers  as well as prime contractors.   Some  of  these
competitors  have greater resources than the Company.   Competition  is
based  on  such  factors as price, technological  capability,  quality,
reliability and timely delivery.

     The  Company's competitive position in its industry  segments  has
been  based  upon  the experience of its technical personnel  in  their
respective  specialized  fields  of  computer  and  peripheral  product
design;  its  broad  range  of products;  its  ability  to  design  and
manufacture  its  products  to  meet  customers'  specifications;   its
specialized  manufacturing and testing facilities; its long association
with  many  of its customers and its managerial and marketing expertise
in  dealing with commercial customers, prime contractors and  the  DOD.
The  Company believes that once a particular supplier's computer and/or
peripheral products have been selected for incorporation in a  military
or  commercial program, further competition by other vendors during the
life cycle of that program is limited.

Engineering, Research and Development
-------------------------------------
     The  Company believes that success within the industry depends  in
large  part  upon  its ability to develop and apply new  technology  to
modify,  enhance and expand its existing line of proprietary  products.
The  funding of these activities is primarily internal through  Company
sponsored  research  and development.   Product development  activities
are  generally  the  result of the need to respond to  the  anticipated
requirements  of  future programs, the introduction of  new  technology
which can be used to enhance product performance and direct requests by
customers  and  the  DOD.  In certain cases the  Company  has  licensed
technology  from commercial manufacturers for subsequent militarization
and  ruggedization.  Management believes approximately 3% to 5% of  net
sales  for  engineering, research and development  expenditures  should
adequately support the growth of the Company's business.

     Engineering, research and development expenditures in  1995,  1996
and  1997  were  approximately $3,900,000, $1,600,000  and  $1,700,000,
respectively.

     Miltope's  funded  research  and  development  efforts   for   its
military/rugged  segment include projects to enhance its  mass  storage
devices,   printers,  computer  workstations  and  portable/hand   held
computers.   Miltope's  funded  research  efforts  for  its  commercial
segment  include  projects  to  enhance  its  airline  in-flight  cabin
management and entertainment products, airborne printers, mass  storage
devices and public access Internet terminals for commercial markets.

Employees
---------
     At   December  31,  1997,  the  Company  employed  260   full-time
personnel.   None of the Company's employees are represented by a labor
union  and the Company has experienced no work stoppages.  The  Company
believes that relations with its employees are excellent.

Export Sales
------------
     The Company recorded foreign sales in its military/rugged industry
segment  of  approximately  $12,846,000, $4,532,000 and  $1,111,000  in
1995,  1996 and 1997, respectively. The Company recorded foreign  sales
in   its   commercial  industry  segment  of  approximately   $257,000,
$1,350,000  and  $11,657,000,  in 1995, 1996  and  1997,  respectively.
During  1996  and  1997, the Company recorded sales of  $1,140,000  and
$10,640,000, respectively, to 3C Communications International, S.A., an
entity affiliated through certain common ownership.

Source of Supply
----------------
     The  Company  utilized multiple suppliers for most  materials  and
components.   In  order  to minimize the risk of  delay  in  delivering
finished  systems, components are sometimes procured according  to  the
projected need for such components under annual purchasing agreements.

Miscellaneous
-------------
     Neither of the Company's two industry segments is subject to
seasonal business fluctuations.

ITEM 2. PROPERTIES
        ----------
     The Company owns a 90,000 square foot building located on 25 acres
in Hope Hull (Montgomery), Alabama.

     In  addition,  the Company owns a 60,000 square foot assembly  and
test  facility  in Troy, Alabama and a 25,000 square foot  clean  room,
assembly and test facility in Springfield, Vermont.

     The Company leases a 2,100 square foot facility in Boulder,
Colorado.

     The Company also leases various sales offices in the United States
and England.

     The  Company owns substantially all of the machinery and equipment
used  in  these facilities.  The Company believes that these facilities
are  well  maintained  and  are adequate  to  meet  its  needs  in  the
foreseeable future.

ITEM 3. LEGAL PROCEEDINGS
        -----------------
      The  Company,  from  time  to time, is  a  party  to  pending  or
threatened legal proceedings and arbitration in the ordinary course  of
business. Based upon information currently available, and in  light  of
legal and other defenses available to the Company, management does  not
consider  liability  from any threatened or pending  litigation  to  be
material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------
     During  the  fourth  quarter of the fiscal year  covered  by  this
Report, no matters were submitted to a vote of security holders through
the solicitation of proxies or otherwise.

<PAGE>
                                PART II
                               ---------
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
        --------------------------------------------------------------------
Market Information
------------------
     The Company's Common Stock has been traded in the over-the-counter
market under the NASDAQ symbol "MILT" since its initial public offering
on  January 23, 1985 and has been trading on the NASDAQ National Market
since  June  4,  1985.  The high and low closing sale  prices  for  the
Common  Stock  in  the  over-the-counter  market  reflect  inter-dealer
prices,  without retail mark-up, mark-down or commission  and  may  not
necessarily represent actual transactions.  The quarterly high and  low
selling  prices (the last daily sale price) of the Common  Stock  since
January 1, 1996 have been:

        Calendar Year 1996          High         Low
        ------------------       --------     ---------
        First Quarter .......... $  2-7/8     $  2-1/16

        Second Quarter..........    8            1-5/8

        Third Quarter...........    4-5/8        2-1/2

        Fourth Quarter..........    4-1/8        2-5/8

        Calendar Year 1997
        ------------------
        First Quarter........... $  3-7/8     $  2-3/4

        Second Quarter..........    4            2-3/4

        Third Quarter...........    4-3/4        3-1/8

        Fourth Quarter..........    4-1/4        3

Holders of Common Stock
-----------------------
     As of February 2, 1998, there were approximately 1,593
shareholders of record and beneficial owners of the Company's Common
Stock.

Dividend Policy
---------------
     No  dividends  were paid in 1996 or 1997.  The  Company  does  not
presently  anticipate  paying  cash  dividends  on  its  Common  Stock.
However, the Board of Directors of the Company will review this  policy
from  time  to time in light of its earnings, capital requirements  and
financial  condition  and other relevant factors, including  applicable
debt  agreement limitations.  The Company's bank loan agreement permits
the  Company  to pay annual dividends of up to 50% of the prior  year's
net income.

ITEM 6. SELECTED FINANCIAL DATA
        -----------------------
     The following is a summary of selected consolidated financial data
of  the Company for the five years ended December 31, 1997 which should
be  read  in conjunction with the consolidated financial statements  of
the Company and the notes thereto:

           (All amounts in thousands, except per share data)

<TABLE>
                                Year Ended December 31,
                      1993      1994       1995      1996      1997
                    -------   --------  ---------  --------  --------
Income Statement
----------------
<S>                 <C>       <C>        <C>       <C>       <C>
Data:
Net sales           $84,320   $ 75,569   $ 65,708  $ 45,513  $ 40,372
Gross profit         21,232      5,680     13,372    11,077     9,803
Income (loss)
 before income taxes (1,381)   (18,885)      (984)    1,770     1,211
Net income (loss)      (856)   (15,460)      (984)    2,170     3,271
Basic and diluted
 net income
 (loss) per share      (.15)     (2.65)      (.17)      .37       .56
Cash dividends per
  share                   -          -          -         -         -
Weighted average
  shares outstanding  5,825      5,834      5,853     5,867     5,870

Balance Sheet Data:
-------------------
Working capital     $31,460   $ 19,398   $ 18,896  $ 17,999  $ 19,652

Total assets         62,587     53,162     41,440    36,332    38,449

Long-term debt        7,872     17,551     16,953    11,340     11251

Stockholders'equity  32,033     17,230     15,913    17,858    21,140

</TABLE>
<PAGE>

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS
         ---------------------------------------------------------------
Business Environment
--------------------
     The   following   discussion  includes  certain  forward   looking
statements which are affected by important factors including,  but  not
limited  to,  actions of competitors, termination of contracts  at  the
convenience   of   the  United  States  government,  customer   funding
variations  in  connection  with  multi-year  contracts  and  follow-on
options  that  could  cause actual results to  differ  materially  from
forward looking statements.

     The    Company's   military/rugged   business   segment   provides
specialized  computers and related peripheral equipment to  the  United
States  and  foreign military defense departments.  Equipment  in  this
segment  takes  two  primary  forms.   The  first  of  these  is  fully
militarized  products,  usually designed especially  for  a  particular
mission  area  with  demanding environmental and quality  requirements.
The  second  of these is rugged products, usually based on a commercial
baseline product, but adapted by the Company to meet environmental  and
quality  specifications  that  exceed the requirements  for  commercial
products.

     This  entire segment has been impacted in recent years by  reduced
government   spending  and  defense  appropriations.   The  militarized
product  area has been especially subject to defense budget cuts.   The
military  continues to reduce funding for the development  and  limited
production  quantities of highly customized systems and products.   The
long design cycle for these programs creates an intangible cost in  the
form  of rapid technological obsolescence.  Some military programs that
would  have  sought militarized equipment some years ago have  modified
the  requirements to reflect a need for rugged or commercial  products.
This  trend has tended to benefit sales of the Company's rugged product
line.   Even  in  the rugged product area, however, defense  cuts  have
taken  a toll.  Competition in this area has become more keen in recent
years, as many government contractors pursue fewer military programs.

     Through its commercial segment, the Company develops, manufactures
and   markets   commercial  products  primarily   for   transportation,
telecommunications and in-field maintenance markets.  Its products  are
airborne   printers,  in-flight  cabin  management  and   entertainment
products,  airline  ticket and boarding pass  printers,  rugged  public
access  Internet  terminals, mass storage devices, and  derivatives  of
rugged  hand  held Intel based computers and portable RISC workstations
originally   developed  for  military  applications.   Sales   in   the
commercial segment increased by 31% in 1997 primarily due to  increased
sales in airborne printers and rugged public access Internet terminals.

Results of Operations
---------------------
     The Company reported net income (loss) of approximately $3,300,000
compared   to   approximately  $2,200,000  in  1996  and  approximately
($1,000,000) in 1995.  The basic and diluted net income per  share  was
$.56  compared  to $.37 per share in 1996 and a net loss  of  $.17  per
share in 1995.

     Sales  for  1997 totaled approximately $40,400,000, a decrease  of
approximately  $5,100,000,  or  11.3%,  from  1996.   This  change  was
attributable   to  a  reduction  in  military  sales  of  approximately
$9,700,000  partially  offset by an increase  in  commercial  sales  of
approximately   $4,600,000.   Sales  in  1996   totaled   approximately
$45,500,000,  a decrease of approximately $20,200,000,  or  30.7%  from
1995.  This change was attributable to a reduction in military sales of
approximately $25,400,000 partially offset by an increase in commercial
sales of approximately $5,200,000.

     Gross  profit, as a percent of sales, was 20.4% in 1995, 24.3%  in
1996  and 24.3% in 1997.  The improvement in 1996 as compared  to  1995
was   attributable  to  improved  materials  handling,  purchasing  and
streamlined manufacturing processes.

     Selling,  general and administrative expenses, as a percentage  of
sales,  was  13.9%  in  1995, 14.5% in 1996  and  15.2%  in  1997.  The
increases in 1996 and 1997 were principally due to a continued emphasis
on increased marketing and  business development efforts.

     Engineering, research and development expenses, as a percentage of
sales,  was 5.9% in 1995, 3.6% in 1996 and 4.2% in 1997.  The  decrease
in  1996  was  attributable  to an increased  amount  of  research  and
development  funded by contracts and improved efficiencies in  research
and development processes.  The increase in 1997 was attributable to an
increased amount of research and development related to new products.

Liquidity and Capital Resources
-------------------------------
     Working   capital  at  December  31,  1997  totaled  approximately
$19,700,000, an increase of approximately $1,700,000 from December  31,
1996.  Accounts receivable decreased approximately $900,000 as a result
of  decreased sales. Inventories increased approximately $900,000 as  a
result   of   the  SPORT  contract.  Deferred  income  taxes  increased
approximately $300,000 as a result of a reduction in the  deferred  tax
asset  valuation  allowance.  Accounts payable decreased  approximately
$1,000,000 as a result of decreased sales.  Accrued expenses  decreased
approximately  $100,000 as a result of decreased accrued  interest  and
decreased accrued liabilities related to long-term contracts.

     The  Company entered into a revolving credit facility in July 1994
for an amount not to exceed $15,000,000 and is subject to extension for
additional one year periods. In September 1997, it was extended for  an
additional  one  year period expiring May 31, 1999.   The  Company  may
borrow against this credit facility based on eligible collateral. As of
December  31,  1997,  the  Company  had  approximately  $7,100,000   of
additional borrowing capacity under this facility.

     Cash  provided by (used in) operating activities was approximately
$(300,000)  in 1995, approximately $5,400,000 in 1996 and approximately
$1,300,000  in  1997.  The  decrease  in  cash  provided  by  operating
activities  in 1997 as compared to 1996 is the result of  increases  in
inventories  and  other assets and decreases in  accounts  payable  and
accrued  expenses partially offset by an increase in net income  and  a
decrease  in  accounts receivable. Other assets increased  due  to  the
reduction  in the deferred tax asset valuation allowance. The  increase
in  cash  provided by operating activities in 1996 compared to 1995  is
primarily  the  result of an increase in net income  and  decreases  in
inventory  and other assets, partially offset by decreases in  accounts
payable and accrued expenses and an increase in accounts receivable.

     In  April 1994, the Company  purchased a new headquarters facility
and  related  capital  equipment located in Montgomery,  Alabama.   The
purchase was financed through a bank term loan and the proceeds of  the
offering  of  taxable revenue bonds (the "Bonds") by the Alabama  State
Industrial Development Authority which was completed January  12,  1995
(the  "SIDA  Offering").   Repayment of the  Bonds  is  secured  by  an
irrevocable letter of credit issued by Regions Bank in an amount up  to
$5,700,000 which in turn is secured by a mortgage on the Montgomery and
Troy,  Alabama  facilities  and a security interest  in  the  equipment
located at such facilities.

     The  Company  has  net  operating loss carryforwards  for  Federal
income  tax  purposes of approximately $5,900,000 and $1,200,000  which
will  expire in 2009 and 2010, respectively, if not utilized.  In prior
years,  the  Company recorded a deferred tax asset valuation  allowance
for   net  operating  loss  carryforwards  of  which  realization   was
uncertain.   During  1996 and 1997, the Company reduced  the  valuation
allowance  by $1,057,000 and $2,524,000, respectively.  The  reductions
in   the  valuation  allowance  were  attributable  to  the  award   of
significant multi-year government and commercial contracts during  1996
and  1997,  and  the result of improved cost controls.   Due  to  these
events,  realization of all deferred tax assets became, in the  opinion
of management, more likely than not.

     The   Company  believes  that  its  working  capital  and  capital
requirement  needs for its current lines of business  and  new  product
development  will be met by its cash flow from operations and  existing
bank loan arrangements.

Effects of Inflation
--------------------
     Inflation has not had a significant impact on the Company's
results of operations.

Year 2000 Compliance
--------------------
     As  is  well  known,  many  computer and digital  storage  systems
express dates using only the last two digits of the year and will  thus
require  modification or replacement to accommodate the year  2000  and
beyond  in order to avoid malfunction and resulting widespread business
disruption.

     The  Company has identified most significant internal applications
that   will  require  modification  to  ensure  Year  2000  Compliance.
Internal  and  external resources are being used to make  the  required
modifications  and  test Year 2000 Compliance.  The  Company  plans  on
completing the modification and testing of all significant applications
by December 31, 1998.

     The   Company  is  initiating  formal  communications   with   its
significant suppliers and customers to determine the extent, if any, to
which  the Company's interface systems would be impacted by those third
parties' failure to remediate their own Year 2000 Compliance issue.

       The cost to the Company of these Year 2000 Compliance activities
has  not  been, and is not anticipated to be, material to its financial
position  or results of operation in any given year.  These  costs  and
the  date  on  which  the  Company plans  to  complete  the  Year  2000
modification  and  testing  processes are based  on  management's  best
estimates, which were derived utilizing numerous assumptions of  future
events including the continued availability of certain resources, third
party  modification plans and other factors.  However, there can be  no
guarantee  that  these estimates will be achieved  and  actual  results
could differ from those plans.

     Given  the  complexity of this issue, it is not possible  for  any
organization to guarantee that all Year 2000 problems will be resolved.
However, the Company believes that it will achieve an acceptable  level
of   readiness  and  will  provide  resources  that  will  address  any
subsequent failures or issues that might arise.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
        -------------------------------------------
     See Table of Contents to Consolidated Financial Statements on Page
F-1.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
        ----------------------------------------------------
     During  the twenty-four months prior to the date of the  financial
statements  contained  herein,  no  Form  8-K  reporting  a  change  of
accountants  has  been filed which included a reported disagreement  on
any matter of accounting principles or practices or financial statement
disclosure.
<PAGE>
                               PART III
                               --------
     The  information called for by Part III (Items 10, 11, 12 and  13)
of  this  Report is hereby incorporated by reference from the Company's
definitive Proxy Statement to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934 in connection with the election  of
directors  at  the 1998 Annual Meeting of Stockholders of the  Company,
which definitive Proxy Statement will be filed with the Securities  and
Exchange  Commission  not later than 120 days  after  the  end  of  the
Company's fiscal year ended December 31, 1997.

                                PART IV
                                -------
ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
           ----------------------------------------------------------------
(a)  The following documents are filed as part of this Report     Page
                                                                  ----
     1.   Consolidated Financial Statements:

          Table of Contents to Consolidated Financial Statements    F-1

          Independent Auditors' Report                              F-2

          Consolidated Balance Sheets as of December 31,
           1996 and 1997                                            F-3

          Consolidated Statements of Operations for the Years
           Ended December 31, 1995, 1996 and 1997                   F-4

          Consolidated Statements of Stockholders' Equity for
           the Years Ended December 31, 1995, 1996 and 1997         F-5

          Consolidated Statements of Cash Flows for the Years
           Ended December 31, 1995, 1996 and 1997                   F-6

          Notes to Consolidated Financial Statements                F-7

          Independent Auditors' Consent                             F-20

     2.   All schedules are omitted because they are not applicable
          or the required information is shown in the consolidated
          financial statements or notes thereto.

     3.   Exhibits                                                    18

<PAGE>

Exhibit                                                           Page
Number     Description of Exhibit                                 Number
-------    ----------------------                                 ------
<TABLE>
<S>        <C>
3(a)       Certificate of Incorporation of the Registrant, as
           amended to date [Incorporated by reference to
           Exhibit 3(a) to the Registrant's Registration
           Statement on Form S-1 filed with the Commission on
           September 6, 1984 (Registration No. 2-93134)]

3(b)       By-laws of the Registrant, as currently in effect
           [Incorporated by reference to Exhibit 3(b) to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1987 (File No. 0-13433)].

3(c)       Specimen share certificate for the Common Stock of
           the Registrant [Incorporated by reference to Exhibit
           4(b) to Amendment No. 1 to the Registrant's
           Registration Statement on Form S-1 filed with the
           Commission on January 8, 1985 (Registration No.
           2-93134)].

10(a)(A)   1985 Key Employee Stock Option Plan adopted by
           the Board of Directors of the Registrant on July 1,
           1985 [Incorporated by reference to Exhibit 10(a) to
           the Registrant's Registration Statement on Form S-1
           filed with the Commission on October 22, 1985
           (Registration No. 33-1042)].

10(a)(B)   Form of 1985 Key Employee Stock Option
           Agreement, dated as of July 1, 1985, between the
           Registrant and certain key employees of the
           Registrant [Incorporated by reference to Exhibit
           10(b) to the Registrant's Registration Statement on
           Form S-1 filed with the Commission on October 22,
           1985 (Registration No. 33-1042)].

10(b)(A)   Incentive Stock Option Plan adopted by the Board of
           Directors of the Registrant on June 1, 1984 and
           approved by Stonebrook Group Inc. (formerly
           Stenbeck Reassurance Co. Inc.) on June 1, 1984, as
           amended by the Board of Directors of the Registrant
           on May 6, 1985 [Incorporated by reference to
           Exhibit 10(c) to the Registrant's Registration
           Statement on form S-1 filed with the Commission on
           October 22, 1985 (Registration No. 33-1042)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                            Page
Number     Description of Exhibit                                  Number
------     ----------------------
<S>        <C>
10(b)(B)   Form of Incentive Stock Option Agreement, dated as
           of June 1, 1984, between the Registrant and certain
           key employees of the Registrant [Incorporated by
           reference to Exhibit 10(e) to the Registrant's
           Registration Statement on Form S-1 filed with the
           Commission on October 22, 1985 (Registration No.
           33-1042)].

10(c)(A)   Management Stock Option Plan adopted by the Board
           of Directors of the Registrant on June 1, 1984 and
           approved by Stonebrook Group Inc. on June 1, 1984,
           as amended by the Board of Directors of the
           Registrant on May 6, 1985 [Incorporated by reference
           to Exhibit 10(f) to the Registrant's Registration
           Statement on Form S-1 filed with the Commission on
           October 22, 1985 (Registration No. 33-1042)].

10(c)(B)   Form of Management Stock Option Agreement, dated
           as of June 1, 1984, between the Registrant and
           certain management employees of the Registrant
           [Incorporated by reference to Exhibit 10(d) to the
           Registrant's Registration Statement on Form S-1 filed
           with the Commission on September 6, 1984
           (Registration No. 2-93134)].

10(d)      Miltope Corporation Cash Bonus Plan, as amended,
           effective January 1, 1984 [Incorporated by reference
           to Exhibit 10(e) to the Registrant's Registration
           Statement on Form S-1 filed with the Commission on
           September 6 , 1984 (Registration No. 2-93134)].

10(f)(A)   1995 Stock Option and Performance Award Plan
           adopted by the Board of Directors of the Registrant
           on April 11, 1995 and approved by the stockholders
           of the Registrant on June 5, 1995 [Incorporated
           by reference to Exhibit 4(a)(1) to the Registrant's
           Registration Statement on Form S-8 filed with the
           Commission on December 21, 1995 (File No. 33-65233)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                              Page
Number     Description of Exhibit                                    Number
------     ----------------------                                    ------
<S>        <C>
10(f)(B)   Form of Non-Qualified Stock Option Agreement under
           the 1995 Stock Option and Performance Award Plan
           [Incorporated by reference to Exhibit 4(a)(2) to the
           Registrant's Registration Statement on Form S-8 filed
           with the Commission on December 21, 1995
           (File No. 33-65233)].

10(f)(C)   Form of Incentive Stock Option Agreement under the
           1995 Stock Option and Performance Award Plan
           [Incorporated by reference to Exhibit 4(a)(3) to the
           Registrant's Registration Statement on Form S-8 filed
           with the Commission on December 21, 1995
           (File No. 33-65233)].

10(g)(A)   Real Estate Sales Contract, dated July 18, 1984,
           between the City of Troy, Alabama and Miltope
           Corporation [Incorporated by reference to Exhibit
           10(o) to the Registrant's Registration Statement on
           Form S-1 filed with the Commission on September 6,
           1984 (Registration No. 2-93134)].

10(g)(B)   Lease Agreement, dated November 1, 1985, between
           the Industrial Development Board of the City of
           Troy, Alabama and Miltope Corporation
           [Incorporated by reference to Exhibit 10(s)(B) to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1986 (File No. 0-13433)].

10(h)      Agreement of Sale, dated July 15, 1994, between
           Miltope Corporation and Marc Beige, with respect
           to the sale of 1770 Walt Whitman Road, Melville,
           New York [Incorporated by reference to Exhibit 10(l)
           to the Registrant's Form 10-K filed with the
           Commission on March 31, 1995 (File No. 0-13433)].

10(i)      Agreement of Lease, dated as of August 10, 1994,
           between Melville Associates, L.P. and Miltope
           Corporation [Incorporated by reference to Exhibit 10(m)
           to the Registrant's Form 10-K filed with the
           Commission on March 31, 1995 (File No. 0-13433)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                              Page
Number     Description of Exhibit                                    Number
------     ----------------------                                    ------
<S>        <C>
10(j)      Purchase and Sale Agreement, dated April 19, 1994,
           between Collier Management Group, Inc. and
           Miltope Corporation, with respect to 500 Richardson
           Road South, Hope Hull, Alabama [Incorporated by
           reference to Exhibit 10(n) to the Registrant's Form 10-K
           filed with the Commission on March 31, 1995
           (File No. 0-13433)].

10(k)(A)(1) Loan Agreement, dated July 27, 1994, among First
            Alabama Bank, as lender, and Miltope Corporation
            and Miltope Business Products, Inc., as borrowers
            [Incorporated by reference to Exhibit 10(o)(A)(1)
            to the Registrant's Form 10-K filed with the
            Commission on March 31, 1995 (File No. 0-13433)].

10(k)(A)(2) Amendment to Loan Agreement, dated as of October
            3, 1994, among First Alabama Bank, Miltope
            Corporation and Miltope Business Products, Inc.
            [Incorporated by reference to Exhibit 10(o)(A)(2)
            to the Registrant's Form 10-K filed with the
            Commission on March 31, 1995 (File No. 0-13433)].

10(k)(A)(3) Amendment to Loan Agreement and Related
            Documents, dated February 3, 1995, among First
            Alabama Bank, Miltope Corporation and Miltope
            Business Products, Inc. [Incorporated by reference
            to Exhibit 10(o)(A)(3) to the Registrant's Form 10-K
            filed with the Commission on March 31, 1995
            (File No. 0-13433)].

10(k)(A)(4) Amendments to Loan Agreement and Related
            Documents, dated February 6, 1997, among Regions
            Bank (formerly First Alabama Bank), Miltope
            Corporation and Miltope Business Products, Inc.
            [Incorporated by reference to Exhibit 10(k)(A)(4) to
            the Registrant's Form 10-K filed with the Commission
            on March 26, 1997 (File No. 0-13433)].

*10(k)(A)(5) Amendments to Loan Agreement and Related
             Documents, dated December 1, 1997, among Regions
             Bank (formerly First Alabama Bank), Miltope
             Corporation and Miltope Business Products, Inc.

--------------
* Filed Herewith
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                              Page
Number     Description of Exhibit                                    Number
-------    ----------------------                                    ------
<S>        <C>
10(k)(B)   Guaranty Agreement, dated July 27, 1994, by the
           Registrant to First Alabama Bank [Incorporated by
           reference to Exhibit 10(o)(B) to the Registrant's
           Form 10-K filed with the Commission on March 31, 1995
           (File No. 0-13433)].

10(k)(C)   Security Agreement, dated July 27, 1994, among
           Miltope Corporation, Miltope Business Products, Inc.
           and First Alabama Bank [Incorporated by
           reference to Exhibit 10(o)(C) to the Registrant's
           Form 10-K filed with the Commission on March 31, 1995
           (File No. 0-13433)].

10(l)(A)   Term Loan Agreement, dated October 13, 1994,
           between First Alabama Bank, as lender, and Miltope
           Corporation, as borrower [Incorporated by
           reference to Exhibit 10(p)(A) to the Registrant's
           Form 10-K filed with the Commission on March 31, 1995
           (File No. 0-13433)].

10(l)(B)   Real Estate Mortgage and Security Agreement, dated
           October 13, 1994, by Miltope Corporation in favor
           of First Alabama Bank [Incorporated by reference to
           Exhibit 10(p)(B) to the Registrant's Form 10-K
           filed with the Commission on March 31, 1995
           (File No. 0-13433)].

10(m)(A)   Loan Agreement, dated January 1, 1995, between the
           State Industrial Development Authority and Miltope
           Corporation [Incorporated by reference to Exhibit 10(q)(A)
           to the Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].

10(m)(B)   Credit Agreement, dated January 1, 1995, between
           Miltope Corporation and First Alabama Bank
           [Incorporated by reference to Exhibit 10(q)(B)to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                             Page
Number     Description of Exhibit                                   Number
------     ----------------------                                   ------
<S>        <C>
10(m)(C)   Guaranty Agreement, dated January 1, 1995, by the
           Registrant to First Alabama Bank [Incorporated by
           reference to Exhibit 10(o)(C) to the Registrant's
           Form 10-K filed with the Commission on
           March 31, 1995 (File No. 0-13433)].

10(m)(D)   Bond Purchase Agreement, dated January 11, 1995,
           among Miltope Corporation, the State Industrial
           Development Authority and Merchant Capital,
           L.L.C. [Incorporated by reference to Exhibit 10(q)(D)
           to the Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].

10(m)(E)   Remarketing Agreement, dated January 1, 1995,
           among Miltope Corporation, the State Industrial
           Development Authority and Merchant Capital,
           L.L.C. [Incorporated by reference to Exhibit 10(q)(E)
           to the Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].

10(m)(F)   Real Estate Mortgage and Security Agreement, dated
           as of January 1, 1995, from Miltope Corporation in
           favor of First Alabama Bank [Incorporated by
           reference to Exhibit 10(q)(F) to the Registrant's
           Form 10-K filed with the Commission on
           March 31, 1995 (File No. 0-13433)].

10(q)(A)   Stock Option Agreement, dated as of June 25, 1993,
           between the Registrant and William L. Dickinson.
           [Incorporated by reference to Exhibit 10(q) to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1994 (File No. 0-13433)].

10(q)(B)   Stock Option Agreement, dated as of June 3, 1994,
           between the Registrant and William L. Dickinson
           [Incorporated by reference to Exhibit 10(u)(B) to
           the Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                             Page
Number     Description of Exhibit                                   Number
------     ----------------------                                   ------
<S>        <C>
10(q)(C)   Stock Option Agreement, dated as of June 5, 1995,
           between the Registrant and William L. Dickinson.
           [Incorporated by reference to Exhibit 10(r)(C) to the
           Registrant's Form 10-K filed with the Commission
           on March 29, 1996 (File No. 0-13433)].

10(q)(D)   Stock Option Agreement, dated as of June 11, 1996,
           between the Registrant and William L. Dickinson.
           [Incorporated by reference to Exhibit 10(q)(D) to the
           Registrant's Form 10-K filed with the Commission
           on March 26,1997 (File No. 0-13433)].

*10(q)(E)  Stock Option Agreement, dated as of September 11, 1997,
           between the Registrant and William L. Dickinson.

10(r)(A)   Stock Option Agreement, dated as of September 7,
           1988, between the Registrant and Alvin E. Nashman
           [Incorporated by reference to Exhibit 10(t)(D) to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1989 (File No. 0-13433)].

10(r)(B)   Stock Option Agreement, dated as of March 30,
           1990, between the Registrant and Alvin E.
           Nashman [Incorporated by reference to Exhibit
           10(t)(B) to the Registrant's Form 10-K filed
           with the Commission on March 27, 1991 (File No.
           0-13433)].

10(r)(C)   Stock Option Agreement, dated as of June 14, 1990,
           between the Registrant and Alvin E. Nashman
           [Incorporated by reference to Exhibit 10(t)(B) to the
           Registrant's Form 10-K filed with the Commission
           on March 27, 1991 (File No. 0-13433)].

10(r)(D)   Stock Option Agreement, dated as of June 13, 1991,
           between the Registrant and  Alvin E. Nashman
           [Incorporated by reference to Exhibit 10(r)(D) to the
           Registrant's Form 10-K filed with the Commission
           on March 27, 1992 (File No. 0-13433)].

----------------
* Filed Herewith
</TABLE>
<PAGE>
Exhibit                                                             Page
Number     Description of Exhibit                                   Number
-------    ----------------------                                   ------
<TABLE>
<S>        <C>
10(r)(E)   Stock Option Agreement, dated as of June 8, 1992,
           between the Registrant and Alvin E. Nashman
           [Incorporated by reference to Exhibit 10(r)(E) to the
           Registrant's Form 10-K filed with the Commission
           on March 25, 1993 (File No. 0-13433)].

10(r)(F)   Stock Option Agreement, dated as of June 25, 1993,
           between the Registrant and Alvin E. Nashman.
           [Incorporated by reference to Exhibit 10(r)(F) to the
           Registrant's Form 10-K filed with the Commission
           on March 31, 1994 (File No. 0-13443)].

10(r)(G)   Stock Option Agreement, dated as of June 3, 1994,
           between the Registrant and Alvin E. Nashman
           [Incorporated by reference to Exhibit 10(w)(G) to
           the Registrant's Form 10-K filed with the Commission
           on March 31, 1995 (File No. 0-13433)].

10(r)(H)   Stock Option Agreement, dated as of June 5, 1995,
           between the Registrant and Alvin E. Nashman.
           [Incorporated by reference to Exhibit 10(s)(H) to the
           Registrant's Form 10-K filed with the Commission
           on March 29, 1996 (File No. 0-13433)].

10(r)(I)   Stock Option Agreement, dated as of June 11, 1996,
           between the Registrant and Alvin E. Nashman.
           [Incorporated by reference to Exhibit 10(r)(I) to the
           Registrant's Form 10-K filed with the Commission
           on March 26, 1997 (File No. 0-13433)].

*10(r)(J)  Stock Option Agreement, dated as of September 11, 1997,
           between the Registrant and Alvin E. Nashman.

10(s)      Stock Option Agreement, dated as of August 7, 1995,
           between the Registrant and George K. Webster.
           [Incorporated by reference to Exhibit 10(t) to the
           Registrant's Form 10-K filed with the Commission
           on March 29, 1996 (File No. 0-13433)].

-------------------
* Filed Herewith
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                             Page
Number     Description of Exhibit                                   Number
-------    ----------------------                                   ------
<S>        <C>
10(t)      Stock Option Agreement, dated as of November 8, 1995,
           between the Registrant and James E. Matthews.
           [Incorporated by reference to Exhibit 10(u) to the
           Registrant's Form 10-K filed with the Commission
           on March 29, 1996 (File No. 0-13433)].

10(w)(A)   Asset Purchase Agreement, dated as of December
           23, 1992, between Miltope Business Products, Inc.
           and Mag-Tek, Inc. [Incorporated by reference to
           Exhibit 10(x)(A) to the Registrant's Form 10-K filed
           with the Commission on March 25, 1993 (File No. 0-13433)].

10(w)(B)   Guaranty of the Registrant, dated as of December 23,
           1992, pursuant to Asset Purchase Agreement, dated
           as of December 23, 1992, between Miltope Business
           Products, Inc. and Mag-Tek, Inc. [Incorporated by
           reference to Exhibit 10(x)(B) to the Registrant's
           Form 10-K filed with the Commission on March 25,
           1993 (File No. 0-13433)].

10(w)(C)   Supply Agreement, dated as of January 5, 1993,
           between Miltope Business Products, Inc. and
           Mag-Tek, Inc. [Incorporated by reference to Exhibit
           10(x)(C) to the Registrant's Form 10-K filed with the
           Commission on March 25, 1993 (File No. 0-13433)].

10(w)(D)   Escrow Agreement, dated as of January 5, 1993,
           among Miltope Business Products, Inc., Mag-Tek,
           Inc. and First Interstate Bank of California, as
           Escrow Agent [Incorporated by reference to Exhibit
           10(x)(D) to the Registrant's Form 10-K filed with the
           Commission on March 25, 1993 (File No. 0-13433)].

10(w)(E)   Marketing Agreement, dated as of January 5, 1993,
           between Miltope Business Products, Inc. and
           Mag-Tek, Inc. [Incorporated by reference to Exhibit
           10(x)(E) to the Registrant's Form 10-K filed with the
           Commission on March 25, 1993 (File No. 0-13433)].
</TABLE>
<PAGE>
<TABLE>
Exhibit                                                             Page
Number     Description of Exhibit                                   Number
-------    ----------------------                                   ------
<S>        <C>
10(w)(F)    Noncompetition Agreement, dated as of January 5,
           1993, between Miltope Business Products, Inc. and
           Mag-Tek, Inc. [Incorporated by reference to Exhibit
           10(x)(F) to the Registrant's Form 10-K filed with the
           Commission on March 25, 1993 (File No. 0-13433)].

10(y)      Renegotiation Agreement, dated August  23, 1996,
           between the Registrant and Mag-Tek, Inc.
           [Incorporated by reference to Exhibit 10(y) to the
           Registrant's Form 10-K filed with the Commission
           on March 26, 1997 (File No. 0-13433)].

18         Letter regarding change in accounting principle, dated May
           13, 1994 [Incorporated by reference to Exhibit 18 to
           the Registrant's Form 10-Q filed with the
           Commission on May 16, 1994 (File No. 0-13433)].

*21        Subsidiaries of the Registrant.

*23        Independent Auditors' Consent, dated March 30, 1998,
           to the incorporation by reference in Registration
           Statements No. 2-97977, No. 33-8245,
           No. 33-78744 and No. 33-65233 on Form S-8 and
           No. 33-33752 on Form S-3 of their report dated
           February 2, 1998 appearing in this Annual Report on
           Form 10-K for the year ended December 31, 1997.

*27        Financial Data Schedule

-----------------
* Filed Herewith
</TABLE>
<PAGE>

MILTOPE GROUP INC. AND SUBSIDIARIES
-----------------------------------

TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------




                                                          Page
                                                          ----
Independent Auditors' Report                              F-2

Consolidated Balance Sheets as of December 31, 1996
  and 1997                                                F-3

Consolidated Statements of Operations for the
  Years Ended December 31, 1995, 1996 and 1997            F-4

Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 1995, 1996 and 1997            F-5

Consolidated Statements of Cash Flows for the
  Years Ended December 31, 1995, 1996 and 1997            F-6

Notes to Consolidated Financial Statements                F-7






All supplemental schedules are omitted because they are not applicable
or the required information is shown in the consolidated financial
statements or notes thereto.

<F1>


<PAGE>



INDEPENDENT AUDITORS' REPORT
----------------------------

To the Stockholders and Board of Directors
   of Miltope Group Inc.:

We have audited the accompanying consolidated balance sheets of Miltope
Group Inc. and its subsidiaries  as of December 31, 1996 and 1997,  and
the   related  consolidated  statements  of  operations,  stockholders'
equity, and cash flows for each of the three years in the period  ended
December  31,  1997.  These financial statements are the responsibility
of  the  Company's  management.  Our responsibility is  to  express  an
opinion on these financial statements based on our audits.

We  conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit
to  obtain  reasonable assurance about whether the financial statements
are  free of material misstatement.  An audit includes examining, on  a
test  basis,  evidence supporting the amounts and  disclosures  in  the
financial  statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management,  as  well
as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In  our opinion, such consolidated financial statements present fairly,
in  all material respects, the financial position of Miltope Group Inc.
and  subsidiaries  at December 31, 1996 and 1997, and  the  results  of
their  operations and their cash flows for each of the three  years  in
the  period  ended  December  31, 1997  in  conformity  with  generally
accepted accounting principles.

/s/ Deloitte & Touche LLP
-------------------------
Birmingham, Alabama
February 2, 1998

<F2>
<PAGE>
<TABLE>
MILTOPE GROUP INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
----------------------------------------------------------------------------
ASSETS                             Notes          1996        1997
                                   -----      ----------  -----------
<S>                                <C>        <C>         <C>
CURRENT ASSETS:
 Cash                                         $  128,000  $   443,000
 Accounts receivable                 2,5,12   10,890,000    9,977,000
 Inventories                            3,5   13,836,000   14,703,000
 Deferred income taxes                    6       82,000      345,000
 Other current assets                            197,000      242,000
                                              ----------   ----------
       Total current assets                   25,133,000   25,710,000
                                              ----------   ----------
PROPERTY AND EQUIPMENT - at cost:       1,5
 Machinery and equipment                       7,524,000    7,177,000
 Furniture and fixtures                        1,475,000    1,561,000
 Land, buildings and improvements              7,335,000    8,021,000
                                              ----------   ----------
       Total property and equipment           16,334,000   16,759,000
 Less accumulated depreciation                 6,765,000    7,101,000
                                              ----------   ----------
       Property and equipment - net            9,569,000    9,658,000
                                              ----------   ----------
DEFERRED INCOME TAXES                    6       383,000    2,240,000
OTHER ASSETS                            1,4    1,247,000      841,000
                                             -----------  -----------
TOTAL                                        $36,332,000  $38,449,000
                                             ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
 Accounts payable                            $ 5,426,000  $ 4,437,000
 Accrued expenses                              1,468,000    1,351,000
 Current maturities of long-term debt     5      240,000      270,000
                                             -----------  -----------
       Total current liabilities               7,134,000    6,058,000
LONG-TERM DEBT                            5   11,340,000   11,251,000
                                              ----------   ----------
       Total liabilities                      18,474,000   17,309,000
                                              ----------   ----------
COMMITMENTS AND CONTINGENCIES             9

STOCKHOLDERS' EQUITY:                 1,5,8
 Common stock - $.01 par value;
  20,000,000 shares authorized;
  6,806,737 and 6,811,112 shares
  outstanding at December 31, 1996
  and 1997, respectively                          68,000       68,000
 Capital-in-excess of par value               20,253,000   20,264,000
 Retained earnings                            11,783,000   15,054,000
                                              ----------   ----------
                                              32,104,000   35,386,000
 Less treasury stock                          14,246,000   14,246,000
                                              ----------   ----------
       Total stockholders' equity             17,858,000   21,140,000
                                             -----------  -----------
TOTAL                                        $36,332,000  $38,449,000
                                             ===========  ===========
</TABLE>
See notes to consolidated financial statements.

<F3>

<PAGE>
<TABLE>
MILTOPE GROUP INC. AND SUBSIDIARIES
-----------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
------------------------------------------------------------------------


                     Notes           1995         1996          1997
                     --------    -----------  ------------  ------------
<S>                  <C>         <C>          <C>           <C>
NET SALES             1,10,12    $65,708,000  $ 45,513,000  $ 40,372,000
                                 -----------  ------------  ------------
COSTS AND EXPENSES:
 Cost of sales              3     52,336,000    34,436,000    30,569,000
 Selling, general and
 administrative                    9,135,000     6,601,000     6,137,000
 Engineering, research and
  development               1      3,860,000     1,630,000     1,705,000
                                 -----------   -----------   -----------
       Total                      65,331,000    42,667,000    38,411,000
                                 -----------   -----------   -----------
INCOME FROM OPERATIONS               377,000     2,846,000     1,961,000

INTEREST EXPENSE - net    4,5      1,361,000     1,076,000       750,000
                                 -----------   -----------   -----------
INCOME (LOSS) BEFORE INCOME
 TAXES                              (984,000)    1,770,000     1,211,000

INCOME TAX BENEFIT        1,6              -      (400,000)   (2,060,000)

NET INCOME (LOSS)                $  (984,000)  $ 2,170,000   $ 3,271,000
                                 ===========   ===========   ===========
BASIC AND DILUTED NET
  INCOME (LOSS) PER SHARE   1          $(.17)         $.37          $.56
                                       =====          ====          ====
WEIGHTED AVERAGE SHARES
  OUTSTANDING               1      5,853,000     5,867,000     5,870,000
                                 ===========   ===========   ===========
</TABLE>

See notes to consolidated financial statements.

<F4>

<PAGE>

MILTOPE GROUP INC. AND SUBSIDIARIES
------------------------------------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
----------------------------------------------------

<TABLE>

                                                                                Net
                                                                            Unrealized
                              Common Stock                                  Appreciation     Treasury Stock
                              ------------        Capital-in-               on Investment    --------------
                                        Par        Excess of   Retained       Available
                             Shares     Value      Par Value   Earnings       for Sale     Shares   Cost
                             ---------  --------  -----------  -----------  -------------  -------  -----------
<S>                          <C>        <C>       <C>          <C>          <C>            <C>      <C>
Balance, January 1, 1995     6,773,737  $ 68,000  $20,154,000  $10,597,000  $ 657,000      939,589  $14,246,000

Exercise of stock options       33,000         -       99,000            -          -            -            -

Change in unrealized
  appreciation on investment
  available for sale                 -          -           -            -   (432,000)           -            -

Net loss                             -          -           -     (984,000)         -            -            -
                             ---------   -------- -----------   ----------   --------      -------  -----------
Balance, December 31, 1995   6,806,737     68,000  20,253,000    9,613,000    225,000      939,589   14,246,000

Change in unrealized
  appreciation on investment
  available for sale                 -          -           -            -   (225,000)           -            -

Net income                           -          -           -    2,170,000          -            -            -
                             ---------   -------- -----------  -----------   --------      -------  -----------
Balance, December 31, 1996   6,806,737     68,000  20,253,000   11,783,000          -      939,589   14,246,000

Exercise of stock options        4,375          -      11,000            -          -            -            -

Net income                           -          -           -    3,271,000          -            -            -
                             ---------   -------- -----------  -----------  ---------      -------  -----------
Balance, December 31, 1997   6,811,112   $ 68,000 $20,264,000  $15,054,000  $       -      939,589  $14,246,000
                             =========   ======== ===========  ===========  =========      =======  ===========
</TABLE>

See notes to consolidated financial statements.

<F5>

<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
----------------------------------------------------
<TABLE>
                                                    1995       1996         1997
                                                 ----------  -----------  ----------
<S>                                              <C>         <C>          <C>
OPERATING ACTIVITIES:
 Net income (loss)                               $(984,000)   $2,170,000  $3,271,000
 Adjustments to reconcile net income (loss)
 to net cash provided by (used in)
 operating activities:
  Depreciation and amortization                  1,701,000     1,737,000   1,670,000
  Provision for slow-moving and obsolete
   inventories                                     883,000       879,000     485,000
  Provision for doubtful accounts receivable       100,000       201,000      95,000
  Provision for asset impairment                   168,000             -     432,000
  Gain on sale of investment available for
   sale                                           (678,000)     (522,000)   (566,000)
  Loss on sale of fixed assets                     420,000        33,000           -
  Deferred income taxes                                  -      (465,000) (2,120,000)
  Change in operating assets and
   liabilities provided (used) cash:
     Accounts receivable                         4,106,000      (674,000)    819,000
     Inventories                                 2,282,000     1,717,000  (1,497,000)
     Income tax receivable                       2,524,000             -           -
     Other current assets                           72,000        59,000     (45,000)
     Other assets                               (1,038,000)    1,287,000    (146,000)
     Accounts payable and accrued expenses      (9,851,000)   (1,022,000) (1,106,000)
                                               -----------   -----------  ----------
       Net cash provided by (used in)
        operating activities                      (295,000)    5,400,000   1,292,000
                                               -----------   -----------  ----------
INVESTING ACTIVITIES:
 Purchases of property and equipment              (716,000)     (625,000) (1,725,000)
 Proceeds from sale of property and equipment       22,000         4,000           -
 Proceeds from sale of investment available
  for sale                                         680,000       524,000     798,000
                                                ----------   -----------  ----------
     Net cash used in investing activities         (14,000)      (97,000)   (927,000)
                                               -----------   -----------  ----------
FINANCING ACTIVITIES:
 Proceeds from (payments of) revolving
  credit loan - net                             (3,003,000)   (4,305,000)    179,000
 Payments of other long-term debt                  (22,000)   (1,171,000)   (240,000)
 Payments of short-term debt                    (3,375,000)            -           -
 Borrowing of long-term debt                     6,100,000             -           -
 Exercise of stock options                          99,000             -      11,000
                                                ----------   -----------  ----------
     Net cash used in financing activities        (201,000)   (5,476,000)    (50,000)
                                                ----------   -----------  ----------
NET INCREASE (DECREASE) IN CASH                   (510,000)     (173,000)    315,000
CASH, BEGINNING OF YEAR                            811,000       301,000     128,000
                                                ----------   -----------  ----------
CASH, END OF YEAR                               $  301,000   $   128,000  $  443,000
                                                ==========   ===========  ==========
SUPPLEMENTAL DISCLOSURE:
 Payments made (received) for:
  Income taxes                                 $(2,802,000)  $         -  $   76,000
                                               ===========   ===========  ==========
  Interest                                     $ 1,596,000   $ 1,279,000  $  821,000
                                               ===========  ============  ==========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
 Reduction of liability associated
  with acquisition                             $         -   $   425,000  $        -
                                               ===========   ===========  ==========
 Change in unrealized appreciation on
  investment available for sale                $  (432,000)  $  (225,000) $        -
                                               ===========   ===========  ==========
</TABLE>

See notes to consolidated financial statements.

<F6>

<PAGE>
MILTOPE GROUP INC. AND SUBSIDIARIES
-----------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
----------------------------------------------------
1.      SUMMARY OF SIGNIFICANT ACCOUNTING
        AND FINANCIAL REPORTING POLICIES
        ----------------------------------
   Principles of Consolidation - The consolidated financial statements
   include the accounts of Miltope Group Inc. and its wholly-owned
   subsidiaries, Miltope Corporation ("Miltope"), Miltope Business
   Products, Inc. ("MBP") and Miltope's wholly-owned subsidiary,
   International Miltope, Ltd., a Foreign Sales Corporation ("FSC").
   These companies are collectively referred to as the "Company". All
   material inter-company transactions have been eliminated.

   Nature of Operations - The Company through its two industry
   segments, military/rugged and commercial, is engaged in the
   development of computers and peripheral equipment for rugged and
   other specialized applications for military and commercial
   customers, domestic and international.

   Accounting Estimates - The Company's consolidated financial
   statements are prepared in conformity with generally accepted
   accounting principles which require management to make estimates
   and assumptions that affect the reported amounts of assets and
   liabilities and disclosure of contingent assets and liabilities at
   the date of the consolidated financial statements and the reported
   amounts of revenues and expenses during the reporting period.
   Actual results could differ from those estimates.

   Fair Value of  Financial Instruments - The carrying value of the
   Company's accounts receivable, accounts payable and accrued
   expenses approximates fair value because of the short-term maturity
   of those instruments.  Additional information regarding the fair
   value of other financial instruments is disclosed in Note 5.

   Investment Available for Sale - Gains and losses on the disposition
   of the investment available for sale are computed under the
   specific identification method.  Unrealized gains and losses, net
   of tax, related to the investment available for sale are reported
   as a separate component of stockholders' equity.

   Depreciation and Amortization - Depreciation of machinery,
   equipment, furniture and fixtures is computed on the straight-line
   method over the estimated useful lives of the related assets
   ranging from 3 to 10 years.  Depreciation of buildings and
   improvements is computed on the straight-line method over an
   estimated useful life of 30 years.  Amortization of leasehold
   improvements is computed on the straight-line method over the
   lesser of the estimated useful life of the improvement or the
   remaining term of the lease.

<F7>
<PAGE>
   Intangible Assets - Intangible assets include a noncompete agreement and
   purchased technology with an aggregate carrying value of $695,000 and
   $301,000 at December 31, 1995 and 1996, respectively, which were being
   amortized over a six to seven-year period on a straight-line basis.
   The accumulated amortization as of December 31, 1995 and 1996  is $605,000
   and $811,000, respectively.  In 1997, the Company recognized an impairment
   in the recoverability of these intangible assets as described in Note 4.

   Progress Billings - In accordance with the terms of certain sales
   contracts, a portion of the costs incurred as of the end of
   specified periods may be billed to the applicable customers even
   though the contracted units have not been delivered.  In accordance
   with trade practice, such progress payments are not recorded as
   revenue until the related units are shipped.  The amounts of paid
   progress billings for which the related units have not been shipped
   are applied against the carrying value of inventories held for the
   contracts (see Note 3).

   Revenue Recognition - Sales and related cost of sales are generally
   recognized under the unit-of-delivery method of accounting. A
   significant multi-year contract is accounted for under the
   percentage-of-completion method of accounting. Income is recognized
   under the percentage-of-completion method using the cost-to-cost
   method after considering management's estimates of costs to
   complete utilizing all available information. Sales under cost
   reimbursable type contracts are recorded as work is performed.
   Provisions for estimated losses on contracts in progress are
   recorded in the period in which the loss is determined. Revisions
   in profit estimates are reflected in the period in which the facts
   that require revision are known. Amounts representing contract
   change orders or claims are included in sales only when they can be
   reasonably estimated and realization is probable.

   Engineering, Research and Development - Engineering, research and
   development expenditures not made in connection with sales
   contracts are charged to expense as incurred.

   Income Taxes - The Company recognizes deferred tax assets and
   liabilities for the expected future tax consequences of events that
   have been included in the Company's consolidated financial
   statements or tax returns.  Deferred tax assets and liabilities are
   determined based on the differences between the financial
   accounting and tax bases of assets and liabilities using enacted
   tax rates in effect for the year in which the differences are
   expected to reverse (see Note 6).

   Net Income (Loss) Per Share - During February 1997, the Financial
   Accounting Standards Board ("FASB") issued Statement of Financial
   Accounting Standards ("SFAS") No. 128, Earnings per Share, which is
   effective for all financial statements issued for periods ending
   after December 15, 1997, including interim periods. In accordance
   with this Standard, the Company is now required to report two
   separate earnings per share numbers, basic and diluted. Both are
   computed by dividing net earnings by the weighted average common
   shares outstanding (basic EPS) or weighted average common shares
   outstanding assuming dilution (diluted EPS).  Based on this
   computation, there is no difference between basic and diluted net
   income (loss) per share.

<F8>
<PAGE>
   Recently Issued Accounting Standards - In June 1997, the FASB
   issued SFAS No. 130, Reporting Comprehensive Income, and SFAS No.
   131, Disclosures About Segments of an Enterprise and Related
   Information, both of which will be effective for the Company in
   fiscal 1998. Management does not expect the adoption of these
   Statements to have a material impact on the Company's financial
   statements and disclosures.

   Reclassifications - Certain prior years amounts have been
   reclassified to conform with the 1997 presentation.
<TABLE>
2. ACCOUNTS RECEIVABLE
   -------------------
        Accounts receivable consist of the following:

                                                     1996          1997
                                                 ------------   -----------
        <S>                                      <C>            <C>
        Amounts receivable from the
          United States Government               $  4,646,000   $ 3,856,000
        Unbilled receivables on
          contracts in progress                       228,000            -
        Amounts receivable from other customers     6,266,000     6,188,000
        Allowance for doubtful accounts              (250,000)      (67,000)
                                                  -----------   -----------
           Total                                  $10,890,000   $ 9,977,000
                                                  ===========   ===========
</TABLE>

   Unbilled receivables relate principally to certain long-term
   contracts accounted for on the percentage-of-completion basis.
   Receivables on the contracts are billed upon shipment of
   deliverables to the customers.

<TABLE>
3.      INVENTORIES
        -----------
      Inventories consist of the following:
                                               1996          1997
                                            -----------  -----------
        <S>                                 <C>          <C>
        Purchased parts and subassemblies   $10,002,000  $10,019,000
        Work-in-process                       3,955,000    4,684,000
                                            -----------  -----------
                                             13,957,000   14,703,000
        Less progress billings received         121,000            -
                                            -----------  -----------
           Total                            $13,836,000  $14,703,000
                                            ===========  ===========
</TABLE>

   Inventories, other than inventoried costs related to long-term
   contracts, are stated at the lower of cost (principally first-in,
   first-out) or market.  Inventoried costs related to long-term
   contracts (included in purchased parts and subassemblies and work-
   in-progress) are stated at actual costs, including engineering and
   manufacturing overheads, contract specific tooling, and other
   related non-recurring costs incurred to date, reduced by amounts
   identified with revenue recognized on units delivered or progress
   completed.  Inventoried costs related to long-term contracts are
   reduced by charging any amounts in excess of estimated realizable
   value to cost of sales. Inventories include amounts relating to
   contracts and programs having production cycles longer than one
   year and a portion thereof will not be realized within one year.
   Inventories include an allowance for slow-moving and obsolete items
   of $2,700,000, $3,599,000 and $1,242,000 at December 31, 1995, 1996
   and 1997, respectively.

<F9>
<PAGE>
4. OTHER ASSETS
   ------------
   The Company owned an investment in M-Systems Flash Disk Pioneers,
   Ltd. ("M-Systems"), a company based in Israel.  During 1995 and
   1996, the Company sold 160,850 and 92,014 shares of M-Systems stock
   at a gain of $678,000 and $522,000, respectively.  In 1996, the
   Company exercised its option to purchase an additional 153,242
   shares of M-Systems stock at a price of $231,000.  Since there were
   certain restrictions concerning the sale of this stock at December
   31, 1996, it was carried at cost in other assets on the
   accompanying consolidated balance sheet.  During 1997, the Company
   sold 153,242 shares of M-Systems stock at a gain of $566,000.

   The Company made loans to a related entity of which the chairman of
   such entity is a member of the Company's board of directors and,
   through other shareholdings, is affiliated with the majority
   shareholder of the Company. Interest income recognized on these
   loans was $46,000 and $37,000 during 1995 and 1996, respectively,
   and is reflected as a reduction of interest expense in the
   accompanying consolidated statements of operations. The maximum
   amount loaned during the year ended December 31, 1996 was $500,000.
   During 1996, all loans to the related entity and accrued interest
   were repaid to the Company. During 1997, there were no loans to the
   related entity.

   In 1993, the Company acquired certain assets of Mag-Tek, Inc., a
   manufacturer of magnetic stripe products.  The consideration
   included aggregate discounted minimum royalty payments of
   approximately $1,100,000.  In August 1996, the Company and Mag-Tek,
   Inc. entered into an agreement to terminate the minimum royalty
   payment provisions of the related asset purchase contract.  In
   connection with this agreement, the remaining long-term debt of
   $425,000 was written off and intangible assets were reduced by the
   same amount.  In 1997, the Company recognized a $432,000 impairment
   in the value of all remaining Mag-Tek, Inc. assets including
   inventory, equipment and intangible assets.

<TABLE>
5. LONG-TERM DEBT
   --------------
   Long-term debt consists of the following:

                                               1996          1997
                                           -----------   -----------
      <S>                                  <C>           <C>
      Revolving credit loan                $ 6,000,000   $ 6,181,000
      Industrial Development Authority
        Revenue Bonds                        5,580,000     5,340,000
                                           -----------   -----------
        Total                               11,580,000    11,521,000
        Less current maturities                240,000       270,000
                                           -----------   -----------
        Total                              $11,340,000   $11,251,000
                                           ===========   ===========
</TABLE>
   A $15,000,000 revolving credit agreement, at the Company's option,
   bears interest at the bank's reference rate (8.25% and 8.5% at
   December 31, 1996 and 1997, respectively), or at a rate equaling
   the London Inter Bank Offered Rate (5.56% and 5.81% at December 31,
   1996 and 1997, respectively) plus 2.0%.  If for any day the total
   amount advanced, regardless of the interest rate option, exceeds
   $10 million, an additional .25% is added to the interest rate. The
   revolving credit facility is scheduled to mature on May 31, 1999,
   at which time the outstanding amount would be converted into a term
   loan payable in twelve equal quarterly installments. However, at
   the request of the Company, the bank may extend the revolving
   credit agreement for successive one year periods. The Company's
   accounts receivable, contract rights and inventories are pledged as
   collateral to the agreement.

<F10>
<PAGE>
   Principal payments for the Industrial Development Authority Revenue
   Bonds (the "Bonds") range between $270,000 and $670,000 from
   December, 1998 through December, 2009.  Repayment of the Bonds is
   secured by an irrevocable letter of credit issued by Regions Bank
   in an amount up to $5,700,000 which in turn is secured by a
   mortgage on the Montgomery and Troy, Alabama facilities and a
   security interest in the equipment located at such facilities.
   Letter of credit commitment fees paid during 1996 and 1997 were
   $78,000 and $71,000, respectively. Property and equipment with a
   carrying value of $8,052,000 and $7,888,000 at December 31, 1996
   and 1997, respectively, are pledged as collateral.  The agreement
   with the Industrial Development Authority bears interest at a
   variable market rate which ranged from 5.44% to 6.0% during 1997,
   and was 6.0% at December 31, 1997.

   The credit agreements referenced above include various provisions
   requiring the maintenance of certain financial ratios and
   limitations on (i) transactions with affiliates, (ii) other debt
   and guarantees, (iii) investment in, and advances to, other
   entities, and (iv) payment of dividends.  On December 31, 1996 and
   1997, there were no violations of credit agreement provisions. The
   Company's bank loan agreement permits the Company to pay annual
   dividends of up to 50% of the prior year's net income.

   The aggregate maturities of current and long-term debt subsequent
   to December 31, 1997, are as follows:
<TABLE>
                   Year Ending December 31,
                         <S>                  <C>
                            1998              $   270,000
                            1999                1,340,000
                            2000                2,405,000
                            2001                2,440,000
                            2002                1,451,000
                         Thereafter             3,615,000
                                              -----------
                         Total                $11,521,000
</TABLE>
   The fair value of long-term debt approximated the carrying value as
   of December 31, 1996 and 1997, as all instruments are at variable
   interest rates.

6. INCOME TAXES
   ------------
     The provision (benefit) for income taxes consists of the following:
<TABLE>
                                1995        1996        1997
                              --------    --------   -----------
     <S>                      <C>         <C>        <C>
     Current:
        Federal               $      -   $  65,000   $     9,000
        State                        -           -        51,000
     Deferred                        -    (465,000)  $(2,120,000)
                              --------   ---------   -----------
     Total                    $      -   $(400,000)  $(2,060,000)
                              ========   =========   ===========
</TABLE>
<F11>
<PAGE>
   The significant components of the deferred income tax benefit are
   as follows:
<TABLE>
                                  1995           1996          1997
                                ----------    -----------   ------------
   <S>                          <C>           <C>           <C>
   Deferred tax benefit
     (exclusive of the effects
     of other components
     listed below)              $ (341,000)   $  (593,000)   $    30,000
   Utilization of operating
     loss carryforward                   -      1,185,000        374,000
   Increase (decrease) in
     valuation allowance           341,000     (1,057,000)    (2,524,000)
                                ----------    -----------    -----------
   Total                        $        -    $  (465,000)   $(2,120,000)
                                ==========    ===========    ===========
</TABLE>
   The deferred tax assets and liabilities at December 31, 1996 and
   1997 are comprised of the following:
<TABLE>
                                             1996
                               ------------------------------------
                                            Deferred
                                Deferred      Tax
   Current:                    Tax Assets  Liabilities     Total
                               ----------  -----------   ---------
     <S>                       <C>         <C>           <C>
     Inventories               $  106,000  $         -   $ 106,000
     Non-deductible accruals      168,000                  168,000
                               ----------  -----------   ---------
     Total current                274,000            -     274,000
     Valuation allowance         (192,000)           -    (192,000)
                               ----------  -----------   ---------
     Net current                   82,000            -      82,000
                               ----------  -----------   ---------
   Long-term:
     Intangible assets            329,000            -     329,000
     Net operating loss
       carryforward             2,777,000            -   2,777,000
     Alternative minimum tax
       credit carryforward        228,000            -     228,000
     Accelerated depreciation           -     (619,000)   (619,000)
                               ----------  -----------   ---------
     Total long-term            3,334,000    (619,000)   2,715,000
     Valuation allowance       (2,332,000)          -   (2,332,000)
                               ----------  ----------   ----------
    Net long-term               1,002,000    (619,000)     383,000
                               ----------  ----------   ----------
     Net                       $1,084,000   $(619,000)   $ 465,000
                               ==========  ==========   ==========
</TABLE>
<F12>
<PAGE>
<TABLE>
                                               1997
                               ------------------------------------
                                            Deferred
                                Deferred        Tax
   Current:                    Tax Assets   Liabilities     Total
                               ----------   -----------   ---------
     <S>                       <C>          <C>           <C>
     Inventories               $  243,000   $         -   $  243,000
     Non-deductible accruals      102,000                    102,000
                               ----------   -----------   ----------
     Total current                345,000             -      345,000
     Valuation allowance                -             -            -
                               ----------   -----------   ----------
     Net current                  345,000             -      345,000
                               ----------   -----------   ----------
   Long-term:
     Intangible assets              3,000             -        3,000
     Net operating loss
       carryforward             2,415,000             -    2,415,000
     Alternative minimum tax
       credit carryforward        235,000             -      235,000
     Accelerated depreciation           -      (413,000)    (413,000)
                               ----------    ----------   ----------
     Total long-term            2,653,000      (413,000)   2,240,000
     Valuation allowance                -             -            -
                               ----------    ----------   ----------
     Net long-term              2,653,000      (413,000)   2,240,000
                               ----------    ----------   ----------
     Net                       $2,998,000    $ (413,000)  $2,585,000
                               ==========    ==========   ==========
</TABLE>
   At December 31, 1996 and 1997, a valuation allowance of $2,524,000
   and $0, respectively, has been established against the net deferred
   income tax assets. During 1996 and 1997, the Company reduced the
   valuation allowance by $1,057,000 and $2,524,000, respectively. The
   reductions in the valuation allowance were attributable to the
   award of significant multi-year government and commercial contracts
   during 1996 and 1997 and the result of improved cost controls.  Due
   to these events, realization of all deferred assets became, in the
   opinion of management, more likely than not.

   During 1996 and 1997, the Company utilized approximately $3,300,000
   and $1,127,000, respectively, of net operating loss carryforwards
   to offset income tax expense. The Company has net operating loss
   carryforwards for federal income tax purposes at December 31, 1997
   of approximately $5,900,000 and $1,200,000, which will expire in
   2009 and 2010, respectively, if not utilized. The Company also has
   approximately $235,000 of alternative minimum tax credit
   carryforwards available to offset future federal income taxes.

<F13>
<PAGE>
   The Company's benefit for income taxes differs from the amount
   computed using the Federal statutory tax rate as a result of the
   following items:
<TABLE>
                                             1995          1996         1997
                                          ----------   -----------   -----------
   <S>                                    <C>          <C>           <C>
   Amount at Federal statutory rate       $ (335,000)  $   602,000   $   412,000
   Increases (reductions) due to:
     State taxes - net of Federal
       income tax benefit                    (34,000)       47,000        38,000
     Change in valuation allowance           341,000    (1,057,000)   (2,524,000)
     Other                                    28,000         8,000        14,000
                                          ----------   -----------   -----------
   Total                                  $        -   $  (400,000)  $(2,060,000)
                                          ==========   ===========   ===========
</TABLE>

7. EMPLOYEE BENEFIT PLANS
   ----------------------
   Savings Plan - The Company has a profit-sharing/401(k) retirement
   plan (the "Plan") which covers substantially all employees.
   Company contributions are discretionary and are determined annually
   based on profits.  The Plan allows for an employee pay conversion
   feature whereby each eligible employee may contribute up to 15% of
   their total pay. The Company's provision pursuant to the Plan
   amounted to $35,000 and $91,000 in 1996 and 1997, respectively. The
   Company made no contributions for 1995.

   Performance Based Bonus Plan - The Company has a bonus plan that
   provides for additional compensation to certain executive officers.
   The bonus is payable upon the attainment of certain financial
   targets that are approved by the Board of Directors, and is
   calculated as a specified percentage of the officer's current base
   salary. No bonus provision was made for 1995. The Company's bonus
   provision for 1996 and 1997 was $261,000 and $132,000,
   respectively.

8.   STOCK OPTIONS
     -------------
   The Company has an Incentive Stock Option Plan ("ISO"), a
   Management Stock Option Plan ("MSO") and a Key Employee Stock
   Option Plan ("KSO").  The ISO, MSO and KSO Plans expired in 1994
   and 1995.  In addition, on April 11, 1995, the Company adopted the
   1995 Stock Option and Performance Award Plan ("SOPA") which was
   approved by the Company's stockholders on June 5, 1995.  Under the
   ISO, MSO, KSO and SOPA plans, 376,780, 187,700, 150,000 and 500,000
   shares of common stock, respectively, were reserved for issuance
   under options to be granted for periods not to exceed ten years at
   an exercise price not less than the fair market value of the shares
   at the date of grant, then are exercisable at a cumulative rate of
   25% in each of the first four years subsequent to the applicable
   grant.

   Under a separate plan, certain of the Company's outside directors
   have been granted options to purchase shares of common stock at
   exercise prices of 85% of the fair market value of such shares at
   date of grant.  Such options are exercisable at any time during the
   term of ten years as long as the recipient is a director or within
   one year after termination of service.

<F14>
<PAGE>
   A summary of the Company's stock options as of December 31, 1995,
   1996 and 1997 and changes during the year ended on those dates is
   presented below:
<TABLE>
                                1995                             1996                             1997
                    --------------------------------  ------------------------------   -----------------------------
                                          Weighted                        Weighted                        Weighted
                               Weighted    Average              Weighted   Average              Weighted   Average
                      Options   Average   Fair Value  Options   Average   Fair Value   Options  Average   Fair Value
                       for     Exercised   at Grant     for     Exercise  at Grant       for    Exercise  at Grant
                      Shares     Price       Date     Shares     Price      Date       Shares    Price      Date
                     --------  ---------  ----------  -------   --------  ----------   -------  --------  ---------
<S>                   <C>        <C>       <C>        <C>         <C>        <C>       <C>        <C>       <C>
Outstanding at
 beginning of year    298,304    $6.43                280,085     $3.87                283,479    $3.57

Granted
  Price = fair value  139,000    $3.20      $2.06      42,500     $2.86      $1.99      18,600    $3.71     $2.60
  Price < fair value   11,278    $2.66      $2.44       6,722     $4.46      $4.09       9,118    $3.29     $2.82

Exercised                   -                               -                           (4,375)   $2.48

Canceled             (168,497)   $7.78                (45,828)    $4.88                (21,105)   $3.94
                     --------                         -------                          -------
Outstanding at end
  of year             280,085    $3.87                283,479     $3.57                285,717    $3.56
                     ========                         =======                          =======

Options exercisable
  at December 31:
Director options       95,085    $3.61                 65,979     $3.64                 74,117    $3.44
Employee options       29,000    $6.95                 62,250     $4.33                105,500    $3.93
                     --------                         -------                          -------
Total                 124,085    $4.39                128,229     $3.97                179,617    $3.73
                     ========                         =======                          =======
</TABLE>
  The following table summarizes information about stock options
  outstanding at December 31, 1997:
<TABLE>

                                       Options Outstanding          Options Exercisable
                           ------------------------------------- -----------------------
                              Number       Weighted                 Number
                            Outstanding     Average     Weighted  Outstanding   Weighted
                               at          Remaining    Average       at        Average
                             December     Contractual   Exercise   December     Exercise
                             31, 1997        Life       Price      31, 1997     Price
                           -------------------------------------  -----------------------
Range of Exercise Prices
    <S>                       <C>            <C>         <C>        <C>          <C>
    $2.39 - $4.46             247,317        7.44        $3.30      141,217      $3.21
    $5.50 - $6.80              38,400        5.15        $5.68       38,400      $5.65
                              -------                               -------
                              285,717        7.13        $3.56      179,617      $3.73
                              =======                               =======
</TABLE>
  In addition, options to purchase 33,000 shares were exercised during
  1995 at an exercise price of $3.00 per share.  These options were
  originally granted independently of the aforementioned stock option
  plans. There are no other options granted independently of the
  aforementioned stock option plans.
<F15>
<PAGE>

  The Company applied Accounting Principles Board Opinion No. 25,
  Accounting for Stock Issued to Employees, and related
  interpretations in accounting for its employee and director plans.
  Compensation expense related to these plans under this methodology
  is insignificant.  Had compensation cost been determined based on
  the fair value at the grant date for awards under these plans
  consistent with the methodology prescribed under Statement of
  Financial Accounting Standards No. 123, Accounting for Stock-Based
  Compensation (SFAS 123), the Company's net income (loss) and basic
  and diluted net income (loss) per share would approximate the pro
  forma amounts below.

<TABLE>
                               1995           1996          1997
                            -----------    ----------   -----------
  <S>                       <C>            <C>          <C>
  Net income (loss):
    As reported             $  (984,000)   $2,170,000   $ 3,271,000
    Pro forma               $(1,034,000)   $2,058,000   $ 3,173,000

  Basic and diluted net
   income (loss) per
   share:
    As reported             $    (0.17)    $     0.37   $      0.56
    Pro forma               $    (0.18)    $     0.35   $      0.54
</TABLE>

  Because the SFAS 123 method of accounting has not been applied to
  options granted prior to January 1, 1995, the resulting pro forma
  compensation cost may not be representative of that to be expected
  in future years.

  For purposes of SFAS 123, the weighted average fair value of the
  options granted during 1995, 1996 and 1997 is estimated on the date
  of grant using the Black-Scholes option-pricing model with the
  following assumptions:
<TABLE>
                                   1995         1996        1997
                                 ------        ------      ------
   <S>                           <C>           <C>         <C>
   Expected life (years)         10.0          10.0        10.0
   Risk-free interest rate       6.31%         6.31%       5.74%
   Dividend rate                    0%            0%          0%
   Expected volatility           60.00%        60.00%      52.30%
</TABLE>

<F16>

<PAGE>

9. COMMITMENTS AND CONTINGENCIES
   -----------------------------
   Leasing Arrangements - The Company is obligated under several
   noncancelable operating leases covering land, office facilities and
   equipment.  The corporate headquarters resides upon land under a
   lease which provides for minimum rentals through 2086. Minimum
   rentals are subject to increases based on the annual consumer price
   index.  Future minimum lease payments under all operating leases
   with an initial or remaining non cancelable lease term of more than
   one year at December 31, 1997 are as follows:
<TABLE>
                    Year Ending December 31,
                    ------------------------
                             <S>             <C>
                             1998            $  227,000
                             1999               188,000
                             2000               132,000
                             2001                49,000
                             2002                39,000
                             Thereafter       2,739,000
                                             ----------
                             Total           $3,374,000
                                             ==========
</TABLE>
   Aggregate rental expense under operating leases amounted to
   $688,000, $376,000 and $237,000 in 1995, 1996 and 1997,
   respectively.

   The Company leases office space at its Hope Hull facility to
   tenants on a year-to-year basis, as well as under a multi-year
   lease with entities affiliated through certain common ownership,
   where future minimum lease receipts at December 31, 1997 are as
   follows:
<TABLE>

            Year Ending December 31,
            ------------------------
                     <S>                <C>
                     1998               $149,000
                     1999                149,000
                     2000                109,000
                     2001                 32,000
                                        --------
                     Total              $439,000
                                        ========
</TABLE>
   Aggregate rental income under operating leases amounted to $146,000
   and $219,000 in 1996 and 1997, respectively.

Litigation - The Company, from time to time, is a party to pending or
threatened legal proceedings and arbitration in the ordinary course of
business.  Based upon information currently available, and in light of
legal and other defenses available to the Company, management does not
consider liability from any threatened or pending litigation to be
material.
<F17>
<PAGE>
10.  SEGMENT INFORMATION
     -------------------
   The Company operates in two industry segments. Information about the
   Company's industry segments is as follows:
<TABLE>
    1995                Military/Rugged   Commercial    Eliminations   Consolidated
    ----                ---------------   -----------   ------------   ------------
    <S>                   <C>             <C>           <C>            <C>
    Net sales             $55,975,000     $ 9,733,000                  $65,708,000
    Intersegment sales      9,247,000          46,000   $(9,293,000)             -
    Net sales             $65,222,000     $ 9,779,000   $(9,293,000)   $65,708,000

    Income (loss) from
      operations          $ 3,164,000     $(2,557,000)  $  (230,000)   $   377,000
    Interest expense - net                                               1,361,000
    Loss before income
     taxes                                                             $  (984,000)
    Identifiable assets   $35,710,000     $ 5,845,000   $  (115,000)   $41,440,000
    Capital expenditures  $   563,000     $   153,000                  $   716,000
    Depreciation and
     amortization         $ 1,024,000     $   677,000                  $ 1,701,000

    1996                Military/Rugged   Commercial    Eliminations   Consolidated
    ----                ---------------   -----------   ------------   ------------
    Net sales             $30,618,000     $14,895,000   $         -    $45,513,000

    Income from
     operations           $ 1,088,000     $ 1,643,000   $   115,000    $ 2,846,000
    Interest expense - net                                               1,076,000
    Income before income
     taxes                                                             $ 1,770,000
    Identifiable assets   $26,518,000     $ 9,814,000   $         -    $36,332,000
    Capital expenditures  $   420,000     $   205,000                  $   625,000
    Depreciation and
     amortization         $ 1,086,000     $   651,000                  $ 1,737,000

    1997                Military/Rugged   Commercial    Eliminations   Consolidated
    ----                ---------------   -----------   ------------   ------------
    Net sales             $20,853,000     $19,519,000   $          -   $40,372,000

    Income from
     operations           $   412,000     $ 1,549,000   $          -   $ 1,961,000
    Interest expense - net                                                 750,000
    Income before income
     taxes                                                             $ 1,211,000
    Identifiable assets   $23,541,000     $14,908,000   $          -   $38,449,000
    Capital expenditures  $   891,000     $   834,000                  $ 1,725,000
    Depreciation and
     amortization         $ 1,052,000     $   618,000                  $ 1,670,000
</TABLE>
   In 1995, 1996 and 1997, foreign sales accounted for 23%, 15% and
   5%, respectively, of the military/rugged segment net sales and 3%,
   9% and 60%, respectively, of the commercial segment net sales.

<F18>
<PAGE>

   During 1995, 1996 and 1997, the United States Government accounted
   for 63%, 54% and 39%  of consolidated net sales of the Company,
   respectively. During 1997, 3C Communications International, S.A.,
   an entity affiliated through certain common ownership, accounted
   for 26% of consolidated net sales of the Company.  No other
   customer accounted for more than 10% of consolidated net sales of
   the Company for 1995, 1996 and 1997.


11.  UNAUDITED QUARTERLY FINANCIAL DATA
     ----------------------------------
   Summarized unaudited quarterly financial data for the years ended
   December 31, 1996 and 1997 is as follows:
<TABLE>
                                    Thirteen Weeks Ended
                      ---------------------------------------------------
                        March 31,  June 30,    September 29,  December 31,
                          1996       1996          1996           1996
                      ----------  -----------  -------------  ------------
     <S>              <C>         <C>          <C>            <C>
     Net Sales        $9,950,000  $11,137,000  $  12,059,000  $12,367,000

     Gross Profit     $2,660,000  $ 2,445,000  $   3,012,000  $ 2,960,000

     Net Income       $  117,000  $   526,000  $     543,000  $   984,000

     Basic and diluted
      net income per
      share                 $.02         $.09           $.09         $.17
</TABLE>

<TABLE>
                                        Thirteen Weeks Ended
                      ----------------------------------------------------
                        March 30,   June 29,   September 28,  December 31,
                          1997        1997        1997           1997
                      ----------  -----------  -------------  ------------
     <S>              <C>         <C>          <C>            <C>
     Net Sales        $9,042,000  $11,992,000  $ 8,326,000    $11,012,000

     Gross Profit     $2,182,000  $ 2,658,000  $ 2,165,000    $ 2,798,000

     Net Income       $  174,000  $   642,000  $   705,000    $ 1,750,000

     Basic and diluted
      net income per
      share                 $.03         $.11        $.12            $.30
</TABLE>

12.  RELATED PARTY TRANSACTIONS
     --------------------------
   During 1996 and 1997, the Company recorded sales of  $1,140,000 and
   $10,640,000, respectively, to 3C Communications International S.A.,
   an entity affiliated through certain common ownership. At December
   31, 1996 and 1997, accounts receivable on such sales was $659,000
   and $2,910,000, respectively.

<F19>

<PAGE>






INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements
No. 2-97977, No. 33-8245, No. 33-78744 and No. 33-65233 of Miltope
Group Inc. on Forms S-8 and No. 33-33752 of Miltope Group Inc. on Form
S-3 of our report dated February 2, 1998 appearing in this Annual
Report on Form 10-K of Miltope Group Inc. for the year ended December
31, 1997.




Birmingham, Alabama
March 30, 1998




<F20>

<PAGE>
                              SIGNATURES
                              ----------
     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned thereunto duly
authorized.

                                        MILTOPE GROUP INC.

March 23, 1998                          /s/ George K. Webster
                                        -----------------------------
                                        George K. Webster
                                        President and Chief Executive
                                        Officer

     Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

March 23, 1998                          /s/ George K. Webster
                                        ------------------------------
                                        George K. Webster
                                        President and Chief Executive
                                        Officer (Principal Executive
                                        Officer)

March 23, 1998                          /s/ James E. Matthews
                                        ------------------------------
                                        James E. Matthews
                                        Vice President, Finance, Chief
                                        Financial Officer and Secretary
                                        (Principal Accounting Officer)

March 23, 1998                          /s/ Teddy G. Allen
                                        ------------------------------
                                        Teddy G. Allen
                                        Chairman of the Board of Directors

March 23, 1998                          /s/ Alvin E. Nashman
                                        -------------------------------
                                        Alvin E. Nashman
                                        Director

March 23, 1998
                                        --------------------------------
                                        Jan H. Stenbeck
                                        Director

March 23, 1998                          /s/ William Mustard
                                        --------------------------------
                                        William Mustard
                                        Director

March 23, 1998                          /s/ Teri Spencer
                                        --------------------------------
                                        Teri Spencer
                                        Director

March 23, 1998                          /s/ Franklin Miller
                                        --------------------------------
                                        Franklin Miller
                                        Director

March 23, 1998                          /s/ William L. Dickinson
                                        --------------------------------
                                        William L. Dickinson
                                        Director

March 23, 1998                          /s/ Jerry O. Tuttle
                                        --------------------------------
                                        Jerry O. Tuttle
                                        Director