U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                           THE SECURITIES ACT OF 1934

                  For the fiscal year ended September 30, 1997
                         Commission File Number 2-17411

                         BOONTON ELECTRONICS CORPORATION

                            A New Jersey corporation
                   IRS Employer Identification No. 22-1543137

                                Mailing Address:
                   25 Eastmans Road, Parsippany, NJ 07054-0465
                                 (973) 386 9696

                    Securities registered under Section 12(b)
                            of the Exchange Act: None

                    Securitiesregistered under Section 12(q)
                              of the Exchange Act:
                     Common Stock, par value $.10 per share


Check whether the Company (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during  the past 12  months,  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Company's knowledge,  in definitive proxy or information  statements
incorporated  by reference  in part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The  Company's  net  revenues  for  the  year  ended  September  30,  1997  were
$7,209,057.

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
Company on December 2, 1997 was $838,157.

The number of shares  outstanding of the Company's  Common Stock, par value $.10
on share on December 2, 1997 was 1,644,301.

Portions of the 1997 Annual Report of Company are incorporated in Parts I,II and
III of this From  10-KSB.  This  report  consists of 60  consecutively  numbered
pages. The Exhibit Index appears on page 36.

                                       1
<PAGE>

                         INFORMATION REQUIRED IN REPORT

                                     PART I

Item 1.    Description of Business.
           -----------------------
    (a)    Business Development.
           ---------------------
           The  Company  is a New  Jersey  corporation  organized  in  1947.  On
       September 7, 1993 the Company and its subsidiaries, Boonton International
       Sales Corporation and Integra, Inc., filed separate,  voluntary petitions
       for  reorganization  under  Chapter 11 of Title 11 of the  United  States
       Bankruptcy Code in the United States Bankruptcy Court for the District of
       New Jersey.  On August 4, 1994 the  Company  filed a  consensual  Plan of
       Reorganization with the bankruptcy court and an Order Confirming Debtors'
       Plan of Reorganization was entered on November 15, 1994.

           The Company has accounted for all transactions related to the Chapter
       11  proceedings  in  accordance  with the  Statement  of  Position  90-7,
       "Financial  Reporting by Entities in Reorganization  under the Bankruptcy
       Code"  issued by the  American  Institute  of  Certified  Accountants  in
       November  1990.  Accordingly,  all  pre-petition  liabilities  that  were
       impaired by the Plan of  Reorganization  are reported  separately  in the
       Company's consolidated balance sheet as "Chapter 11 Settlement",  current
       and noncurrent.

           The success of the Companys' Plan of Reorganization was due primarily
       to the sale of its land and  facility  in  Randolph,  New  Jersey and the
       termination of an overfunded employees' defined benefit pension plan. The
       Company has  relocated  its entire  operation to the Township of Hanover,
       New Jersey.  Further  details  regarding  the lease are  provided in Item
       2.(a)  below  and  "Note 8" to the  accompanying  consolidated  financial
       statements.

    (b)    Business of Company.
           --------------------
           (1) The Company designs and produces electronic testing and measuring
           instruments including power meters, voltmeters and modulation meters.
           Recent  models are  microprocessor  controlled  and are often used in
           computerized  automatic testing systems.  The Company's  equipment is
           marketed throughout the world to commercial and government  customers
           in the electronics industry.

           (2) The Company markets and  distributes its products  throughout the
           United   States   and  abroad   through   some  15   domestic   sales
           representatives and 24 foreign distributors.  Representatives sell on
           a commission  basis,  while  distributors  buy products for resale at
           discounted  ex-factory prices. Its  representatives  and distributors
           also handle the products of other  manufactures,  although  these are
           not generally  competitive  with the Company's  products  except that
           some  items   handled  by  foreign   distributors   may  be  somewhat
           competitive.

           (3) Not applicable.

           (4)The  Company  is in  competition  with many  other  manufacturers,
           several of which are  substantially  larger than the Company and have
           far  larger   professional  staffs  and  far  greater  financial  and
           technical resources. Of these,  Hewlett-Packard is believe to account
           for approximately 60% of the domestic market and, together with other
           larger  companies  (including  Tektronix,  Fluke,  Giga-tronics,  

                                       2
<PAGE>

           and Keithley Instruments in the United States, and Phillips,  Marconi
           Instruments,    Mitsubishi   and   Anritsu   abroad)   accounts   for
           approximately   90%   of   the   worldwide   market   in   electronic
           instrumentation.

           (5) The  Company  obtains  raw  materials  from a variety of sources.
           Neither the sources nor the  availability  of essential raw materials
           are  considered  to  play  any  significant  part  in  the  Company's
           business.

           (6) During this fiscal year  approximately 21% of the Company's sales
           were made to the United States Government and agencies  thereof.  The
           Company believes that an additional  substantial portion of purchases
           made by its non-Governmental  customers are related to the filling of
           orders placed with such customers by the United States Government and
           agencies thereof. The Company is not able to determine the percentage
           of sales  associated with purchases from  non-Governmental  customers
           that are related to the filling of orders placed by the United States
           Government and agencies thereof.

           (7) The  trademark  "Boonton"  was  registered  in the United  States
           Patent  and  Trademark   Office  on  February  18,  1997  (Reg.   No.
           2,038,515). The Company does not have any other patents,  trademarks,
           licenses,  franchises,   concessions,  royalty  agreements  or  labor
           contracts.

           (8) Not applicable.

           (9)Under  established United States Government  contract  procedures,
           substantially all of the Company's  Government  contracts are subject
           to  cancellation,  in which case the  Company  would be  entitled  to
           recover  its  costs  incurred  to the  date  of  cancellation  plus a
           reasonable  profit thereon.  The cancellation  costs and a reasonable
           profit  are  determined  in  accordance   with  standard   Government
           accounting practices.

           (10) During the fiscal year ended  September  30,  1997,  the Company
           spent  approximately  $735,528  on  company-sponsored   research  and
           development  activities.  The Company spent approximately $921,927 on
           such activities  during the fiscal year ended September 30, 1996. The
           Company does not currently have any  customer-sponsored  research and
           development activities.

           (11) The New  Jersey  Department  of  Environmental  Protection  (the
           "NJDEP") has conducted an  investigation  concerning  disposal,  at a
           facility in New Jersey previously  leased by the Company,  of certain
           materials formerly used by the Company's manufacturing  operations at
           that site and the  possible  effect of such  disposal  on the aquifer
           underlying  the property.  The disposal  practices and the use of the
           materials  in question  were  discontinued  in 1978.  The Company has
           cooperated  with the  NJDEP  investigation  and has  been  diligently
           pursuing  the  matter in an attempt to resolve it as rapidly as NJDEP
           operating procedures permits.

                  The  Company  and the NJDEP have agreed upon a plan to correct
           ground water  contamination  at the site,  located in the Township of
           Parsippany-Troy Hills, pursuant to which wells have been installed at
           an estimated cost to the Company of $300,000.  The plan  contemplates
           that the wells will be operated and that soil and water  samples will
           be taken and analyzed until such time (which the Company is unable to
           predict)  as  contamination  levels  satisfactory  to the  NJDEP  are
           attained.  Operating  expenditures incurred by the Company during the
           fiscal  

                                       3
<PAGE>

           year ended September 30, 1997 in connection with the site amounted to
           approximately   $43,173.   The  Company   estimates   that  operating
           expenditures in this regard during the current fiscal year, including
           the costs of operating  the wells and taking and  analyzing  soil and
           water  samples,  will  amount to  approximately  $52,000.  (12) As of
           September 30, 1997 the Company had 48 full time employees.

Item 2.    Description of Property.
           ------------------------
           (a) On September 28, 1994, the Company sold its facility in Randolph,
New  Jersey  to NTV  Realty,  Inc.  The  proceeds  of the  sale of the  land and
building,  $2,300,000,  were  immediately  transferred  to United Jersey Bank in
accordance with the Company's Plan of Reorganization. The Company entered into a
lease  agreement,  effective  October 1, 1994, with 25 Eastmans Road Associates,
Ltd. to lease approximately 30, 000 square feet of a facility located in Hanover
Township,  New  Jersey.  The term of the  lease  agreement  is for  seven  years
beginning  on October 1, 1994 and ending on September  30, 2001.  The lease also
contains an option to extend the term of the lease by five years.

           (b) and (c) Not applicable.

Item 3.    Legal Proceedings.
           ------------------
           (a) Reference is made to the discussion in Item 1.(a) above regarding
the status of the  Company's  Chapter 11 Plan of  Reorganization.  The principal
parties are the Company,  its  subsidiaries  and its  creditors.  As noted,  the
Company's Plan of Reorganization was confirmed on November 15, 1994.

           Reference is made to the discussion in Item 1.(b)(11) above regarding
an investigation by the NJDEP concerning certain discontinued disposal practices
of the  Company  and  their  effect  on the soil and  ground  water at a certain
facility  formerly  occupied  by the  Company.  No  administrative  or  judicial
proceedings have been commenced in connection with such investigation. The owner
of the  Parsippany-Troy  Hills  facility has  notified the Company,  that if the
investigation proves to interfere with the sale of the property,  it may seek to
hold the Company liable for any resulting damages. Since may 1983, the owner has
been on notice of this problem and has failed to institute any legal proceedings
with respect thereto. While this does not bar the owner from instituting a suit,
it is the opinion of the  Company's  legal  counsel that it is doubtful that the
owner  would  prevail  on any claim  due to the fact that such a claim  would be
barred by the statute of limitations.

           (b) Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders.
           ----------------------------------------------------
           Not applicable.


                                       4
<PAGE>

                                     PART II

Item 5.    Market for the Company's Common Equity and Related Stockholder
           Matters.
           --------------------------------------------------------------
    (a)    Market Information.
           -------------------
           (1) The Company's  common stock is traded (symbol  "BOON") on the OTC
           Bulletin  Board.  The  following  is the  range  of high  and low bid
           information for the Company's  common stock for each quarterly period
           within the two most  recent  fiscal  years.  These  prices  represent
           inter-dealer  quotations,  do  not  include  markups,   markdowns  or
           commissions, and do not necessarily represent actual transactions.

              FOR THE QUARTER ENDED            HIGH              LOW
              ---------------------            ----              ---
                     12/31/95                  3                 1 5/8
                     3/31/96                   3                 2 1/8
                     6/30/96                   2 7/16            1 13/16
                     9/30/96                   2                 1 1/2
                     12/31/96                  1 5/8             1 1/4
                     3/31/97                   1 3/8             1 1/8
                     6/30/97                   1 7/16            1 1/16
                     9/30/97                   1 1/4             1 1/8

           (2) Not applicable.
    (b)    Holder.
           -------
           There were 669 record  holders of the  Company's  common  stock as of
           December 9, 1997.
    (c)    Dividends.
           ----------
           (1) There were no cash  dividends  declared on the  Company's  common
           stock for the fiscal years ended September 30, 1997 and 1996.
           (2) Not applicable.

Item 6.    Management's Discussion and Analysis.
           -------------------------------------
    (a)    Results of Operations.
           ----------------------
           (i)  1997 versus 1996
                ----------------
                Net sales of $7,209,057 for the fiscal year 1997 were $1,170,721
or 19.4%  above  the prior  year.  Domestic  sales  increased  $1,400,296  which
reflected a recovery from the overall  industry  decline  experienced  in fiscal
1996 an included  with an increase  of  $607,603 in military  contract  revenues
which  resulted  from the major  Air Force  contracts  awarded  in August  1997.
International  sales  declined  by  $229,575  from the prior year as a result of
economic difficulties in Europe.

                                       5
<PAGE>

         The  company  had a gross  income  of  $3,068,958  or 42.6%  of  sales.
Commission  expense  decreased to 9.9% sales versus 10.6% of sales for the prior
year  due to the  increased  military  contract  revenues  which  carry  a lower
commission  rate.  There was a profit from  operations of $71,845  versus a loss
from  operations  of  $448,315  for the prior year.  During the year  management
continued  to take  steps to  reduce  operating  costs.  With the  exception  of
commission  expense all other categories of operating expense decreased in total
by $156,276 when compared to fiscal 1996.

         Other  expenses  increased to $40,501 in fiscal 1997 versus  $25,886 in
fiscal 1996.  The  increase was  primarily  due to  increased  interest  expense
associated  with the increased  borrowings  pursuant to the New Jersey  Economic
Development  Authority  (NJEDA) direct loan. The company  borrowed an additional
$394,071  under the NJEDA loan  during the fiscal  year,  however,  it should be
noted that no further  borrowings shall occur subsequent to July 31, 1997. There
was a $51,660  gain  realized  from the sale of assets which  resulted  from the
Company's sale of all of machine shop equipment. The machine shop department was
eliminated  during the fiscal year with all machined  parts now being  purchased
from outside sources.

         The profit before taxes and special  charges was $31,344 versus a prior
year loss of $474,201.  There were no taxes or special charges during the fiscal
year  resulting in a net income of $31,344 or $0.02  earnings per share versus a
prior year net loss of $1,049,679 or $0.72 loss per share.

         Accounts  receivable  increased to  $1,051,887  from the prior year end
balance of $971,342,  however,  the average  collection  period declined to 51.2
days from the prior year's 59.9 days. Inventories increased to $1,306,115 from a
$1,210,940  prior year balance.  It should be noted that $51,820 of the increase
in inventories was associated with the capitalization of demonstrator equipment.
The average production  inventory turnover increased to 3.4 times as compared to
a prior year's 2.8 times.  The current  ratio was 2.2 to 1 versus a prior year's
2.3 to 1. The working capital at year end was $1,603,146 versus the prior year's
$1,495,987.  The Company's order backlog at September 30, 1997 was $1,176,115 as
compared to its backlog at September 30, 1996 which was $1,362,193.

         It is  important  to note that  after six years of losses  the  Company
reported a profit  before  taxes and  special  charges of $31,344 for the fiscal
year ended September 30, 1997. The Company  attained its goal of $7.2 million in
revenues  for the fiscal  year and  management  expects to match or exceed  that
level of revenues in fiscal year 1998.  Also the Company,  in August  1997,  was
notified of an military  contract  award for the  Marines  that upon  completion
should total approximately $1 million in revenues.

                                       6
<PAGE>

         (ii) 1996 versus 1995
              ----------------

         Net sales of $6,038,336 for the fiscal year 1996 were $798,912 or 11.7%
below the prior year.  Domestic sales decreased  $655,547 which, as noted in the
Form 10-QSB filed for June 30, 1996, was  attributable  to an overall decline in
the industry in the United  States.  It is  significant to note that there was a
$271,169 increase in military contract revenues during the year. In addition the
Company  received two  significant  contract  awards from the United  States Air
Force in August  1996 which will total  approximately  $1.7  million in revenues
upon completion.  International sales declined by $143,365 below the prior year.
This trend is not expected to continue in fiscal 1997 as greater  emphasis  will
be placed on the  Southeast  Asia region which has shown recent  indications  of
development.

         The Company had a gross profit of $2,629,756 or 43.6% of sales versus a
prior year gross  profit of  $2,948,485  or 43.1% of sales.  Commission  expense
increased  to 10.6% of sales  versus 8.5% of sales for the prior year  primarily
due to international sales, which carry a high commission rate and were 42.3% of
revenues in fiscal 1996 versus 39.5% of sales in fiscal  1995.  There was a loss
from operations of $448,315 versus an income from operations of $163,032 for the
prior year.  The loss in 1996 was partially  attributable  to the reduced volume
but was also impacted by certain costs that were non-recurring in nature.  These
costs,  which represent 46.2% of the loss from operations,  were "CE" mark audit
fees of $108,525,  funds provided for new technology  research at the New Jersey
Institute of Technology  totaling $65,000,  and severance expense for the former
president of $33,920.  Management of the Company has already instituted steps to
reduce  operating  costs in fiscal 1997 which steps include  reductions in wages
and payroll taxes due to personnel  reductions.  Further cost reductions will be
implemented as identified by management as fiscal 1997 progresses.

         Other  expenses of $25,886  were below the prior years  $245,527.  This
decrease  was  primarily  because  there were no moving  expenses  or Chapter 11
expenses in fiscal 1996. The loss before taxes and special  charges was $474,201
versus a loss of $82,495 for the prior year. The special charges of $350,405 was
primarily a result of costs, and accrued costs for work to be performed in 1997,
associated  with  further  environmental  delineation  work  performed at a site
formerly leased by the Company.  This work is being performed in order to obtain
a  "Conditional  No Further  Action  Letter" from the New Jersey  Department  of
Environmental  Protection  (NJDEP) which would allow the Company to finalize the
groundwater  remediation program as discussed at Item 1.(b) (11) above. The loss
per share before special  charges was $.48 versus earnings per share of $.17 for
the prior year. The net loss per share was $.72.

                                       7

<PAGE>

         Accounts receivable decreased to $971,342 from a prior years $1,011,980
and the average  collection period increased to 59.9 days from 53.8 days for the
prior year.  Inventory  of  $1,210,940  was  comparable  to the prior year.  The
average inventory  turnover  decreased,  due to the reduced sales volume, to 2.8
versus a prior years 3.6.  The  current  ratio was 2.3 to 1 versus a prior years
3.0  to  1.  Working  capital  declined  to  $1,495,987  versus  a  prior  years
$1,827,718.  The  decline in working  capital was due  primarily  to the accrued
environmental  costs for the work to be performed  in fiscal 1997,  reduction of
deferred tax assets and  increased  accounts  payable  balances.  The  Company's
backlog at September 30, 1997 was  $1,362,193  which  included  $512,000 for the
military contracts.

         The  Company  has  prepared  an  operating  plan for fiscal  1997 which
anticipates  a  19%  increase  in  revenue  and a net  income  of  approximately
$200,000.  The 1997 first quarter revenues were approximately $1.8 million which
supports,  on an  annualized  basis,  the  expected  increase in  revenues.  The
military contracts awarded in fiscal 1996 contributed  approximately $265,000 to
the first quarter 1997 revenues.  The Company's  backlog as of December 31, 1996
was $1,296,718 which included an additional $546,000 for the military contracts.
An  additional  $299,000 was released by the Air Force in November  1996 against
these contracts.

    (b)  Liquidity and Capital Resources.
         --------------------------------

         The Company's  working capital for the fiscal years ended September 30,
1997 and 1996 was $1,603,146 and $1,495,987, respectively.

         Under the conditions set forth in the Plan of Reorganization  (see Item
1.(a) above), the Revolving Credit and Loan Agreement, dated August 15, 1990, as
amended  by  Letter  Agreement  dated May 1,  1992,  secured  by  assets  and/or
collateral as set forth in such agreement, between the Company and United Jersey
Bank was satisfied by payments totaling  $3,000,000.  The $3,000,000 in payments
consist of the following: $2,300,000 from the proceeds the Company realized from
the sale of the  facility and land in Randolph,  New Jersey;  $150,000  realized
from the sale of excess  inventory  and  assets;  $150,000  consisting  of three
$50,000  payments in June,  July and August of 1994; and a $400,00 note payable,
at 8%  interest,  payable in  $25,000  monthly  installments  of  principal  and
interest  commencing  September  1994 and  continuing  until January 1996. As of
January 1996,  the  commitment to United  Jersey Bank was  completed.  The third
payment to the unsecured creditors was made in October 1997. The Company expects
to finance the $153,372  balance due  unsecured  creditors  from  operations  in
fiscal 1998.

         On  February 6, 1995,  The Board of  Directors  loaned  $300,000 at 14%
interest  per annum to the Company.  Initially  these loans were to be repaid by
April 1995 however due to the Company's need to maintain the use of the proceeds
from these loans repayment was waived. Effective September 1, 1995, the interest
rate for these  loans was reduced to 9% per annum.  Repayment  of these loans is
now covered by a  Subordination  Agreement by and between the  Directors and the
New Jersey Economic  Development  Authority (NJEDA) in accordance with the terms
of a loan the Company has with NJEDA which is discussed below.

                                       8
<PAGE>

         On July 31, 1996,  the Company  executed a Direct Loan Agreement by and
between the Company and the NJEDA.  The agreement  provided for a direct loan of
$500,000 at 6 3/4% per annum.  The proceeds of the loan are to be used primarily
for the acquisition of capital assets. As of September 30, 1997, the Company had
used $484,090 of the loan amount and had repaid principal of $45,361.

         Total debt-to-capital at September 30, 1997 was 83.2% compared to 72.5%
the prior year end. During 1998 the Company expects to finance capital  spending
and working capital requirements with cash provided from operations.

Item 7.  Financial Statements.
         ---------------------

         Reference is made to the financial  statements and  supplementary  data
appearing on the pages of this report set forth below.

                                                                  Page(s)
                                                                  -------
Independent Auditors' Report                                        17
Balance Sheet as of September 30, 1997 and 1996                     18
Statements of Operations for the Years
  Ended September 30, 1997, 1996 and 1995                           19
Statements of Changes in Stockholders Equity
  for the Years Ended September 30, 1997, 1996 and  1995            20
Statements for Cash Flows for the Years Ended
  September 30, 1997, 1996 and 1995                                 21
Notes to Financial Statements                                       23

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure.
         -----------------------------------------------------------------------
         Not applicable.

                                    PART III

Item 9.  Directors and Executive Officers of the Company.
         ------------------------------------------------
         Listed  below are the names and ages of the  directors  of the Company,
all  positions  and  offices  held by each such person and the period or periods
during which he has served in such positions and offices.  All are now directors
and were  elected  to  their  present  term of  office  at  Annual  Meetings  of
Shareholders as set forth in the table below. The By-Laws of the Company provide
for a Board of Directors  consisting  of up to seven  members.  The candidacy of
none of the directors is the subject of any arrangement or understanding between
such director and any other person or persons, except the directors and officers
of the Company acting solely in that capacity.

                                       9
<PAGE>

       All of the  directors  listed  below have been  engaged for the past five
years in the "Principal Occupation" listed below.
<TABLE>
<CAPTION>


                                            Position with Issuer              Period As
Name                       Age              and Principal Occupation          Director
----                       ---              ------------------------          --------

Elected 1997 with terms expiring in 2000:
----------------------------------------
<S>                      <C>                <C>                              <C>
John M. Young              79               Director, retired Vice          1947 - Present
                                            President and Operations
                                            Manager of the Corporation

Abel Sheng                 56               Director, President, Raamco     1996 - Present
                                            International, Inc. and         1991 - 1994
                                            Sidco Investments, Inc.,
                                            Investment companies

Elected 1996 with terms expiring in 1999:
-----------------------------------------
Daniel Auzan               54               Director, Chairman of           1996 - Present
                                            The Board, President
                                            Directeur General,
                                            General  de  Mesure  et  de
                                            Maintenance   Electronique,
                                            S.A.

Otto H. York               87               Director, Vice Chairman         1969 - Present
                                            Of the Board, President,
                                            York Resources, Inc.

Elected 1995 with terms expiring in 1998:
-----------------------------------------
Jack Frucht                83               Director; retired Chairman      1947 - Present
                                            of the Board and Chief Exe-
                                            cutive Officer of the Corporation

Ronald T. DeBlis           73               Director; retired Dun &         1981 - Present
                                            Bradstreet

Appointed 1997 with term expiring in 1998:
------------------------------------------

Yves Guyomar               60               Director, President and         1997 - Present
                                            CEO of the Corporation
</TABLE>

                                       10

<PAGE>
================================================================================
       Listed  below  are the names and ages of the  executive  officers  of the
Company and the period during which they have served as such.  Each such officer
generally  serves  for a term  of one  year  at the  pleasure  of the  Board  of
Directors.  The  selection  of  none  of  the  officers  is the  subject  of any
arrangement  or  understanding  between  such  officer  and any other  person or
persons,  except the directors and officers of the Company acting solely in that
capacity.
                            Position with Issuer                Period As
Name                Age     and Principal Occupation            Officer
----                ---     ------------------------            -------

Yves Guyomar        60      President and Chief Executive       1997 - Present
                            Officer

John E. Titterton   48      Vice President Finance and          1986 - Present
                            Secretary/Treasurer

================================================================================
       Mr.  Guyomar is employed as President and CEO of the Company for a period
expiring  April 15, 1999  pursuant to an agreement  that  provides for an annual
salary of $140,000.  This agreement provides that if Mr. Guyomar's employment is
terminated  by the  Company  during  the term of the  agreement  other  than for
"cause"  (as defined in the  agreement)  the  Company  will  continue to pay his
salary through the end of the term.

       Mr.  Guyomar  was a  member  of the  Board of  Directors  and  Sales  and
Marketing Director of General  Electronique,  Brive, France in 1996.  Previously
from 1982 to 1995 he was General Manager of the Technique and Industrial  Center
for TRT, a subsidiary of Phillips, in Brive. The Technique and Industrial Center
had a staff of 1,000  employees  which included 100 engineers and technicians in
Research and Development.  The center  specialized in Radio Frequency  equipment
for  military  applications  and  in  microwave  link  for  public  and  private
communication. Mr. Guyomar, from the University of Lille, Lille, France, holds a
Diploma of Engineering in electronics and microwave.  He was appointed President
and CEO by the Board of Directors in April 1997.

       Mr.  Titterton was employed as Vice  President  and  Controller of Ruesch
Machine  Company,  a wholly-owned  subsidiary of Met-Coil  Systems  Corporation,
prior to his entering the employ of the Company in October 1986.  Prior thereto,
he was employed as a Senior Accountant by Price Waterhouse.  Mr. Titterton holds
a Bachelor  of Arts  degree in  Economics/Accounting  from  Rutgers  University,
Newark College of Arts and Sciences.

Item 10.  EXECUTIVE COMPENSATION.
          ----------------------
     (a)  EXECUTIVE COMPENSATION:
          ----------------------
          The following table sets forth,  for the fiscal years  indicated,  all
compensation  awarded  to,  earned  by or paid to the  Chief  Executive  Officer
("CEO") of the Company.  There were no executive  officers of the Company  other
than the CEO whose  compensation  exceeded  $100,000  with respect to the fiscal
years ended September 30, 1997, 1996, 1995.

                                       11
<PAGE>
<TABLE>
<CAPTION>

                                            Summary Compensation Table

                                                                             Long-Term
Name and                   Annual              Compensation                 Compensation     All other
Principal Position         Year     Salary         Bonus         Other         Awards      Compensation
------------------         ----     ------         -----         -----         ------      ------------

<S>                        <C>     <C>               <C>        <C>             <C>             <C>
Yves L. Guyomar            1997    $105,000          N/A          N/A           N/A              N/A
  President & CEO
Ronald T. DeBlis           1996     N/A              N/A          N/A           N/A              N/A
  President & CEO
Otto H. York               1996     N/A              N/A          N/A           N/A              N/A
  President & CEO
Holmes Bailey              1996    $ 72,962          N/A          N/A           N/A           $32,308
  President & CEO
Holmes Bailey              1995    $140,000          N/A          N/A           N/A           $13,124
  President & CEO
</TABLE>

Note: Pre-requisites and other personal benefits, securities or property to each
officer did not exceed either $50,000 or 10% of such executives salary and bonus

       (b)  Board of Directors Compensation:
            -------------------------------
       Those  Directors  of the Company who are not salaried  officers  (Messrs.
Auzan,  DeBlis,  Frucht,  Sheng, York and Young) are paid Directors' fees at the
rate of $10,000 per year,  in quarterly  installments,  plus $500 per  scheduled
meeting of the Board or any committee.  The Board has, by resolution,  agreed to
be paid  fifty  percent  (50%)  of  their  fees for  fiscal  year  1997 and 1996
respectively.

       (c)  Aggregated Fiscal Year-End Option Values:
            ----------------------------------------
       Not applicable.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
         --------------------------------------------------------------

         The following  tabulation lists, as to (I) each present Director of the
Company,  (ii) each other person known to the Company to be the beneficial owner
of more than five percent of the voting  common stock of the Company,  and (iii)
all  Directors  and  officers  as a group,  the  number  and  percentage  of the
Company's voting common stock owned by each beneficial owner, Director and group
on the date  indicated.  Except as  reflected in the  tabulation,  all shares of
common stock are directly owned by the named  individual and group members,  and
such  individuals and group member possess sole voting and investment power with
respect to such shares.

                                       12
<PAGE>

                                    Number of Shares
                                    Beneficially Owned         Percentage
Beneficial Owner                    on December 9, 1997       of Ownership
--------------------------------------------------------------------------------
Daniel Auzan (Director)                      *
c/o General Electronique SA
ZI de Bracheux
16 rue Joseph Cugnot
60000 Beauvais
France

Ronald T. DeBlis (Director)                 63,648               3.87%
37 Farmstead Road
Short Hills, NJ  07087

Jack Frucht (Director)                      36,782               2.24%
380 Mountain Road, Apt. #512
Union City, NJ  07087

Otto H. York (Director)                    181,087              11.01%
130 Hempstead Court
Madison, NJ  07940

John M. Young (Director)                   130,606**             7.94%
9749 Maplecrest Circle, S.E.
Lehigh Acres, FL 33936

G.E.M. USA, Inc.                           268,016              16.30%

Sidco Investment, Inc.                     151,304               9.20%

Holmes Bailey                              212,500              12.92%
280 The Orchard at Heath Village
Schooleys Mt. Road
Hackettstown, NJ 07840-4031

All directors and officers                 844,043***           50.94%
as a group (8 persons)

--------------------------------------------------------------------------------
    *    Mr.  Auzan is the  indirect  beneficial  owner of the  shares  owned by
         G.E.M. USA, Inc.
    **   Includes  6,000 shares owned by his wife,  to which Mr. Young is claims
         beneficial ownership.
    ***  Includes   12,  500  shares  which  may  be  acquired  on  exercise  of
         outstanding options.
--------------------------------------------------------------------------------

Item 12. Certain Relationships and Related Transactions.
         ----------------------------------------------
         None.

                                       13
<PAGE>

Item 13.     Exhibits and Reports on Form 8-K.
             ---------------------------------
             Exhibits:  (See Page 36 for Index to  Exhibits  filed in the Annual
             Report on Form 10-KSB for the year ended September 30, 1997.)

Exhibit       3.1   Certificate   of  Amendment  of  the   Certificate  of
                    Incorporation  of the Company filed February 28, 1991. Filed
                    as an Exhibit in the Annual Report on Form 10-K for the year
                    ended  September  30,  1991,  and  incorporated   herein  by
                    reference.

              3.2   Articles of Incorporation of the Company as amended to date.
                    Filed as an Exhibit  in the  Annual  Report on Form 10-K for
                    the year ended September 30, 1991, and  incorporated  herein
                    by reference.

              3.3   By-Laws  of the  Company  as  amended  to date.  Filed as an
                    Exhibit  in the  Annual  Report  10-K  for  the  year  ended
                    September 30, 1991, and incorporated herein by reference.

             10.1   1987  Incentive  Stock  Option  Plan,  1987  Employee  Stock
                    Purchase Plan and 1987 Stock Option Program for Non-Employee
                    Directors and form of option grant(s)  thereunder.  Filed as
                    an Exhibit  in the  Annual  Report on Form 10-K for the year
                    ended  September  30,  1988,  and  incorporated   herein  by
                    reference.

              10.2  Report  on Form 8-K  dated  December  23,  1994  for  "Other
                    Events", "order Confirming Debtors' Plan of Reorganization",
                    effective  November  15,  1994.  Filed as an  Exhibit in the
                    Annual  Report on Form  10-KSB for the year ended  September
                    30, 1994, and incorporated herein by reference.

              10.3  Lease   Agreement  with  Eastmans  Road   Associates,   Ltd.
                    Effective October 1, 1994. Filed as an Exhibit in the Annual
                    Report on Form 10-KSB for the year ended September 30, 1994,
                    and incorporated herein by reference.

              10.4  Employment  Agreement  with Holmes  Bailey dated  January 1,
                    1995.  Filed as an  Exhibit  in the  Annual  Report  on Form
                    10-KSB  for  the  year  ended   September   30,  1995,   and
                    incorporated herein by reference.

              10.5  Report  on Form 8-K  dated  September  27,  1995 for  "Other
                    Events",  "Letter of Intent",  effective September 25, 1995.
                    Filed as an Exhibit in the Annual  Report on Form 10-KSB for
                    the year ended September 30, 1995, and  incorporated  herein
                    by reference.

              10.6  Report  on Form 8-K  dated  December  15,  1995  for  "Other
                    Events",  "Letter of  Intent",  effective  December 5, 1995.
                    Filed as an Exhibit in the Annual  Report on Form 10-KSB for
                    the year ended September 30, 1996, and  incorporated  herein
                    by reference.

              10.7  Report  on Form 8-K  dated  February  26,  1996  for  "Other
                    Events",  "Purchase of Treasury Stock",  effective  February
                    23, 1996.  Filed as an Exhibit in the Annual  Report on Form
                    10-KSB  for  the  year  ended   September   30,  1996,   and
                    incorporated herein by reference.

              10.8  Report on Form 8-K dated March 18, 1996 for "Other  Events",
                    "Purchase of Treasury Stock", effective March 7, 1996. Filed
                    as an Exhibit in the  Annual  Report on Form  10-KSB for the
                    year ended  September 30, 1996, and  incorporated  herein by
                    reference.

                                       14
<PAGE>

              10.9  Report on Form 8-K dated January 7, 1997 for "Other Events",
                    "Purchase of Stock", effective December 9, 1996. Filed as an
                    Exhibit  in the  Annual  Report on Form  10-KSB for the year
                    ended  September  30,  1996,  and  incorporated   herein  by
                    reference.

              10.10 Report on Form 8-K dated June 18,  1997 for "Other  Events",
                    "Purchase  of Stock",  effective  June 9, 1997.  Filed as an
                    Exhibit  in the  Annual  Report on Form  10-KSB for the year
                    ended September 30, 1997.

              10.11 Report of on Form 8-K dated July 7, 1997 for "Other Events",
                    "Purchase of Stock" and  "Appointment of President and CEO",
                    effective  June 30, 1997.  Filed as an Exhibit in the Annual
                    Report on Form 10-KSB for the year ended September 30, 1997.

              10.12 Employment  Agreement with Yves Guyomar  effective  April 16
                    1997.  Filed as an  Exhibit  in the  Annual  Report  on Form
                    10-KSB for the year ended September 30, 1997.

              10.13 Shared   Manufacturing  and  Facilities   Agreement  between
                    Boonton Electronics  Corporation and G.E.M.  Illinois,  Inc.
                    dated  October  1,  1997.  Filed as an Exhibit in the Annual
                    Report on Form 10-KSB for the year ended September 30, 1997.

              27.   Financial Data Schedule

Exhibits  (2),(4),  (9), (13),  (16),(18),(19),(21),(22),(23),(24)  and (28), as
defined  in  Regulation  S-B,  Item  601,  are  omitted  because  they  are  not
applicable.

Exhibit (11) is omitted because the  computation can be readily  determined from
the financial statements in Item 7. Above.

                                       15
<PAGE>

                                   SIGNATURES

             Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act,  the  Company  has  caused  this  report to be signed on its  behalf by the
undersigned, thereunto duly authorized.

                                         BOONTON ELECTRONICS CORPORATION
                                         -------------------------------
                                                  (Company)

                                         By /s/ YVES GUYOMAR
                                           -----------------------------
                                                Yves Guyomar, President and
                                                Chief Executive Officer
                                                Date: January 9, 1998

       Pursuant to the  requirements  of the Exchange  Act, this report has been
signed  below by the  following  persons  on  behalf of the  Company  and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>

Signature                                  Title                              Date
---------                                  -----                              ----

<S>                                   <C>                                <C>    
By /s/ RONALD T. DEBLIS               Director                           January 9, 1998
  -----------------------
       Ronald T. DeBlis


By /s/  YVES GUYOMAR                  Director, President and            January 9, 1998
  -----------------------             Chief Executive Officer
        Yves Guyomar                  (principal executive officer)


By /s/ JACK FRUCHT                    Director                           January 9, 1998
  -----------------------
       Jack Frucht


By /s/ OTTO H. YORK                   Director, Vice Chairman            January 9, 1998
  -----------------------             of the Board
       Otto H. York


By /s/ JOHN E. TITTERTON              Secretary and                      January 9, 1998
  -----------------------             Treasurer (principal
       John E. Titterton              financial and accounting
                                      officer)
</TABLE>

                                       16
<PAGE>

                           INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders
Boonton Electronics Corporation and Subsidiaries


       We have audited the accompanying  Consolidated  Balance Sheets of Boonton
Electronics  Corporation  and  Subsidiaries  as of September 30, 1997,  1996 and
1995,  and  the  related  Consolidated  Statements  of  Operations,  Changes  in
Stockholders'  Equity and Cash Flows for the years then ended.  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 audit.

       We conducted our audit 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 audit provides a reasonable basis for our opinion.

       In our  opinion,  the  financial  statements  referred  to above  present
fairly, in all material respects,  the financial position of Boonton Electronics
Corporation  and  Subsidiaries  as of September 30, 1997, 1996 and 1995, and the
results of its  operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.



                                 By /s/ I. WEISMANN ASSOCIATES
                                   ---------------------------------
                                        CERTIFIED PUBLIC ACCOUNTANTS
                                        Morristown, New Jersey

November 7, 1997

                                       17
<PAGE>
<TABLE>
<CAPTION>

                         BOONTON ELECTRONICS CORPORATION
                                 BALANCE SHEETS

                                                                  September 30,
                                                           --------------------------
                                                                1997           1996
                                                           -----------    -----------
<S>                                                        <C>            <C>        
ASSETS:
Current assets:
   Cash and cash equivalents                               $   121,620    $   113,041
   Trade receivable (Note 1)                                 1,051,887        971,342
    Inventories (Notes 1 & 3)                                1,306,115      1,210,940
    Deferred tax benefit (Note 10)                              81,058         81,058
    Prepaid expenses                                           333,325        230,340
                                                           -----------    -----------
        Total current assets                                 2,894,005      2,606,721
                                                           -----------    -----------
Property and equipment - net (Notes 1 & 4)                     534,023        163,858
                                                           -----------    -----------
Other assets:
        Deferred tax benefit (Note 10)                         988,651        988,651
        Deposits                                                71,169         67,768
                                                           -----------    -----------
        Total other assets                                   1,059,820      1,056,419
                                                           -----------    -----------
        Total assets                                       $ 4,487,848    $ 3,826,998
                                                           ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
        Note payable (Note 6)                              $    63,379    $    10,503
        Related party loans (Note 6)                            93,530         43,530
        Accounts payable                                       800,931        469,882
        Other current liabilities                              284,528        538,328
        Unsecured claims payable (Chapter 11 settlement)
        - Current (Notes 2)                                     48,491         48,491
                                                           -----------    -----------
        Total current liabilities                            1,290,859      1,110,734
Note payable - noncurrent (Note 6)                             375,351         77,837
Related party loans (Note 6)                                   218,970        218,970
Unsecured claims payable (Chapter 11
  settlement) noncurrent (Note 2)                              153,372        201,505
                                                           -----------    -----------
        Total liabilities                                    2,038,552      1,609,046
                                                           -----------    -----------

Commitments and Contingencies (Note 8)
Stockholders' equity:
        Common stock (Note 9)                                  163,659        155,659
        Capital in excess of par                             4,613,637      4,421,637
        Deficit                                             (2,328,000)    (2,359,344)
                                                           -----------    -----------
        Total stockholders' equity                           2,449,296      2,217,952
                                                           -----------    -----------
        Total liabilities and stockholders' equity         $ 4,487,848    $ 3,826,998
                                                           ===========    ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       18
<PAGE>
<TABLE>
<CAPTION>

                               BOONTON CORPORATION
                            STATEMENTS OF OPERATIONS

                                                  YEARS ENDED SEPTEMBER 30,
                                                  -------------------------
                                             1997          1996            1995
                                         -----------    -----------    -----------
<S>                                      <C>            <C>            <C>        
Net sales                                $ 7,209,057    $ 6,038,336    $ 6,837,248
Cost of sales                              4,140,099      3,408,580      3,888,763
                                         -----------    -----------    -----------
Gross profit                               3,068,958      2,629,756      2,948,485
                                         -----------    -----------    -----------
Operating expenses:
    Commissions                              715,835        640,517        586,969
    Research and development                 735,528        921,827        783,132
    Other operating expenses               1,545,750      1,515,727      1,415,352
                                         -----------    -----------    -----------
    Total operating expenses               2,997,113      3,078,071      2,785,453
                                         -----------    -----------    -----------
Income/(loss) from operations                 71,845       (448,315)       163,032
                                         -----------    -----------    -----------
Other (income)/expense:
    Interest expense                          47,823         27,709         44,181
    Chapter 11 expense                            --             --         34,037
    Gain on sale of assets                   (51,660)        (1,000)       (21,771)
    Environmental expense                     43,173         51,879         66,539
    Moving expense                                --             --         98,516
    Interest income                           (4,257)       (39,390)        (3,859)
    Other (income)/expense:                    5,422        (13,312)        27,884
                                         -----------    -----------    -----------
      Total other/(income) expense            40,501         25,886        245,527
                                         -----------    -----------    -----------
Income/(loss) before taxes and special
charges                                       31,344       (474,201)       (82,495)
Income taxes/(benefit)                            --        225,073       (316,339)
                                         -----------    -----------    -----------
Income/ (loss) before special charges
                                              31,344       (699,274)       233,844
Special charges (Note 12)                         --       (350,405)            --
                                         -----------    -----------    -----------

Net income/(loss)                        $    31,344    $(1,049,679)   $   233,844
                                         ===========    ===========    ===========
Earnings/(Loss) per common share
(Note 13):
      Earnings/(loss) from
continuing operations                    $       .02    $      (.48)   $       .17
    Special charges                               --           (.24)            --
                                         -----------    -----------    -----------

    Net earnings/(loss)                  $       .02    $      (.72)   $       .17
                                         ===========    ===========    ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       19
<PAGE>
<TABLE>
<CAPTION>

                         BOONTON ELECTRONICS CORPORATION
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995



                             Common Stock                                             
                             ------------        Additional     Retained       Treasury
                     Number of                    Paid-in       Earnings/     Shares At
                     of Shares      Par Value     Capital       (Deficit)        Cost          Total
                     ----------     ---------   -----------   ------------   ------------   -----------

<S>                   <C>         <C>           <C>           <C>            <C>            <C>        
Balance 9/30/94       1,492,085   $   149,209   $ 4,359,556   $(1,117,342)   $(1,002,729)   $ 2,388,694
Exercise of stock
  options                30,000         3,000        28,875            --             --         31,875
Treasury stock
  reissued                   --            --            --       (57,314)        70,438         13,124
Net income -
  year ended
  9/30/95                    --            --            --       233,844             --        233,844
                    -----------   -----------   -----------   -----------    -----------    -----------

Balance 9/30/95       1,522,085       152,209     4,388,431      (940,812)      (932,291)     2,667,537
Exercise of stock
  options                34,500         3,450        33,206            --             --         36,656
Treasury stock
  reissued                   --            --            --      (368,853)       932,291        563,438
Net (loss) - year
  ended 9/30/96              --            --            --    (1,049,679)            --     (1,049,679)
                    -----------   -----------   -----------   -----------    -----------    -----------
Balance 9/30/96       1,556,585       155,659     4,421,637    (2,359,344)            --      2,217,952
Exercise of stock
  option                 80,000         8,000       192,000            --             --        200,000
Net income -
  year ended
  9/30/97                    --            --            --        31,344             --         31,344
                    -----------   -----------   -----------   -----------    -----------    -----------
Balance 9/30/97       1,636,585   $   163,659   $ 4,613,637   $(2,328,000)   $        --    $ 2,449,296
                    ===========   ===========   ===========   ===========    ===========    ===========



                                  The accompanying notes are an integral part of these statements.
</TABLE>


                                       20
<PAGE>
<TABLE>
<CAPTION>

                         BOONTON ELECTRONICS CORPORATION
                            STATEMENTS OF CASH FLOWS


                                                      Years Ended September 30,
                                              -----------------------------------------
                                                  1997          1996            1995
                                              -----------    -----------    -----------
<S>                                           <C>            <C>            <C>        
Cash flows from operating activities:
Net income (loss)                             $    31,344    $(1,049,679)   $   233,844
Adjustments to reconcile net income:
     Depreciation and amortization                 60,398         27,335         26,294
     Deferred taxes                                    --        223,873       (316,339)
     (Gain) on sale of equipment                  (51,660)        (1,000)       (21,771)
Decrease (increase) in current assets:
     Accounts receivable                          (80,545)        40,638         (7,616)
     Inventories                                  (95,175)        (7,582)      (251,438)
     Prepaid expenses                            (102,985)        33,230        281,904
Increase (decrease) in current liabilities:
     Accounts payable                             331,049        181,754        159,953
     Accrued expenses                            (253,800)       120,566        (58,320)
     Chapter 11 settlement-current                     --        (53,024)       (10,854)
                                              -----------    -----------    -----------
     Net cash provided (used) by operating
          activities                             (161,374)      (483,889)        35,657
                                              -----------    -----------    -----------
Cash flows from investing activities:
     Proceeds from sale of assets                  51,660          1,000         21,771
     Purchase of equipment                       (430,563)       (89,024)       (71,647)
     Proceeds from cash surrender of life
     insurance policies                                --             --        245,190
     Other                                         (3,401)            --           (421)
                                              -----------    -----------    -----------
     Net cash provided (used) by investing
     activities                               $  (382,304)   $   (88,024)   $   194,893
                                              -----------    -----------    -----------
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       21
<PAGE>
<TABLE>
<CAPTION>

                         BOONTON ELECTRONICS CORPORATION
                            STATEMENTS OF CASH FLOWS


                                                          Years ended September 30,
                                                     -----------------------------------
                                                        1997        1996          1995
                                                     ---------    ---------    ---------
<S>                                                  <C>          <C>          <C>      
Cash flows from financing activities:
Treasury stock reissued                              $      --    $ 932,291    $  70,438
Excess cost of treasury stock reissued                      --     (368,853)     (57,314)
Increase in notes payable                              394,071       90,019           --
Payments on loans                                      (43,681)     (99,444)    (279,902)
Related party borrowings                                50,000           --      300,000
Payments on related party loans                             --           --      (37,500)
Chapter 11 settlement-noncurrent                       (48,133)     (52,283)     (13,771)
Payment of borrowings on life insurance
   policies                                                 --           --     (229,921)
Proceeds from stock options exercised                  200,000       36,656       31,875
                                                     ---------    ---------    ---------
    Net cash provided (used) by financing
      activities                                       552,257      538,386     (216,095)
                                                     ---------    ---------    ---------
Increase (decrease) in cash and cash equivalents
                                                         8,579      (33,527)      14,455
Cash and cash equivalents at beginning
                                                       113,041      146,568      132,113
                                                     ---------    ---------    ---------
Cash and cash equivalents at ending                  $ 121,620    $ 113,041    $ 146,568
                                                     =========    =========    =========

Supplemental disclosures of cash flow information:
     Income taxes paid                               $   1,425    $   1,025    $   7,125
                                                     =========    =========    =========
     Interest paid                                   $  33,575    $  33,082    $  38,808
                                                     =========    =========    =========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       22
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
         DESCRIPTION OF BUSINESS:

        A. The  Company  is a New  Jersey  corporation  organized  in 1947.  The
           Company  designs  and  produces   electronic  testing  and  measuring
           instruments including power meters, voltmeters and modulation meters.
           Recent  models are  microprocessor  controlled  and are often used in
           computerized  automatic testing systems.  The Company's  equipment is
           marketed through the world to commercial and government  customers in
           the electronics industry.

           The Company  markets and  distributes  its  products  throughout  the
           United   States   and  abroad   through   some  15   domestic   sales
           representatives and 24 foreign distributors.  Representatives sell on
           a commission  basis,  while  distributors  buy products for resale at
           discounted  ex-factory prices. Its  representatives  and distributors
           also handle the products of other  manufacturers,  although these are
           not generally  competitive  with the Company's  products  except that
           some  items   handled  by  foreign   distributors   may  be  somewhat
           competitive.

       B.  Use  of  estimates  - The  preparation  of  financial  statements  in
           conformity with generally  accepted  accounting  principles  requires
           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  financial  statements  and the
           reported  amounts of  revenues  and  expenses  during  the  reporting
           period. Actual results could differ from those estimates.

        C. The company  accounts  for  uncollectible  accounts  under the direct
           write-off method whereas  generally  accepted  accounting  principals
           require provision for such expenses under the allowance  method.  The
           effect of using this method  approximates the allowance method as all
           amounts are deemed to be fully collectible.

        D. Inventories - stated at the lower of cost or market determined by the
           first-in, first-out (FIFO) method.

        E. Property,  plan and  equipment -  Depreciation  and  amortization  is
           calculated  by  the  straight-line  method  for  financial  reporting
           purposes at rates based on the following estimated useful lives:

                 Building and improvement                                39
                 Machinery and equipment                               5-10
                 Office furniture and fixtures                         5-10
                 Transportation equipment                                 3


                                       23
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

           The accelerated  cost recovery system and modified  accelerated  cost
           recovery  system  is used  for  income  tax  purposes.  Cost of major
           renewals  and  betterments  that extend the life of the  property and
           equipment are  capitalized.  Expenditures for maintenance and repairs
           are charged to expenses as incurred.

        F. Financial  Risk  -  The  Company  regularly  maintains  bank  account
           balances in excess of FDIC insurable limit.

        G. Income  Taxes - The Company  adopted the  provisions  of Statement of
           Financial Accounting Standards No. 109, "Accounting for Income Taxes"
           which requires a company to recognize  deferred tax  liabilities  and
           assets for the expected  future tax  consequences of events that have
           been recognized in a Company's  financial  statements or tax returns.
           Under this method, deferred tax liabilities and assets are determined
           based on the  differences  between the financial  statement  carrying
           amounts and tax basis of assets and  liabilities  using  expected tax
           rates in effect in the years in which the differences are expected to
           reverse.  The Company  recognized  the benefit of net operating  loss
           carryforwards  applying the valuation  allowance  which requires that
           the tax benefit be limited bases on the weight of available  evidence
           and the probability  that some portion of the deferred tax asset will
           be realized.

        H. Financial  Instruments - The Company's financial  instruments include
           cash, cash equivalents, trade receivables and payable, long-term debt
           and loans from related parties for which carrying amounts approximate
           fair  value.  It is not  practicable  to  estimate  the fair value of
           related party loans and long-term debt.

        I. Stock-Based  Compensation  - The Company has elected  follow  Account
           Principles  Board  Opinion  No. 25,  Accounting  for Stock  Issued to
           Employees (APB25) and related  interpretations  in accounting for its
           employee  stock options.  Under APB25,  because the exercise price of
           employee  stock  options  equals the market  price of the  underlying
           stock on the date of grant,  no  compensation  expense  is  recorded.
           Effective  October 1, 1997,  the Company  has adopted the  disclosure
           only  provisions of Statement of Financial  Accounting  Standards No.
           123, Accounting for Stock-Based Compensation (Statement 123).

                                       24

<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997


NOTE 2 - PROCEEDINGS UNDER CHAPTER:

         The  Company  operated  under  Chapter  11  proceedings  for the period
September 7, 1993 through  November 15, 1994 when, on the later date,  the order
confirming  the  Plan  of  Reorganization  was  entered  by  the  United  States
Bankruptcy  Court,  District of New Jersey subject to the court closing the case
180 days after said entry  (Local Rule  25(a))  cause for  extension  of time in
closing case (Local Rule 25(b)) and filing of application  for allowance of fees
and allowance  within 90 days after entry of final order  confirming plan (Local
Rule 25(c)).

         In accordance  with S.A.S.  Sections  560.03,  the Company has adjusted
downward all liability  accounts  that were  affected by the  confirmed  Plan of
Reorganization entered on November 15, 1994. Therefore, the financial statements
reflect the maximum  liabilities  to creditors  under the Chapter 11 proceedings
and the Plan of  Reorganization.  The  settlement of unsecured  claims under the
confirmed  Plan of  Reorganization  totaling 35% of allowed  claims for accounts
payable and accrued  expenses  provided  for the  following  payments to be made
subsequent to November 15, 1994:

         %
        --
        10          From after tax proceeds  from  termination  of the company's
                    pension plan
         5          One year after initial payout
         5          Two years after initial payout
        15          Three years after initial payout

         Pre-petition  liabilities  in  accordance  with the  November  15, 1994
confirmed plan of reorganization were compromised of the following:

              Accounts payable                    $   702,233
Accrued expenses:
     Commissions payable                              126,370
     Vacation pay                                      96,250
     Severance pay                                     25,108
     Other                                             78,282
                                                  -----------

          Total September 30, 1994                  1,028,243

Court authorized payments/adjustments                 (75,073)
                                                  -----------
Balance subject to settlement                         953,170
Amount discharged and/or paid to date                 751,307
                                                  -----------

Chapter 11 settlement total September 30, 1997    $   201,863
                                                  ===========

                                       25

<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997
<TABLE>
<CAPTION>

NOTE 3 - INVENTORIES
                                                                September 30,
                                                                -------------

                                                        1997                        1996
                                                        ----                        ----

<S>                                                 <C>                         <C>       
Raw material                                     $     639,045               $     468,619
Work in process                                        577,337                     688,273
Finished Goods                                          89,733                      54,048
                                                 -------------               -------------
Total inventories                                $   1,306,115               $  $1,210,940
                                                 =============               =============


NOTE 4 - PROPERTY, PLANT AND EQUIPMENT:
                                                                September 30,
                                                                -------------
                                                        1997                        1996
                                                        ----                        ----

Building and improvements                        $      62,329               $      61,054
Machinery and equipment                              1,657,819                   1,512,488
Office furniture and fixtures                          582,518                     444,959
Transportation equipment                                13,188                      13,188
                                                 -------------               -------------
      Total                                          2,315,854                   2,031,689
Less Accumulated depreciation                        1,781,831                   1,867,831
                                                 -------------               -------------
      Net depreciated cost                       $     534,023               $     163,858
                                                 =============               =============
</TABLE>

NOTE 5 - RESULTS OF OPERATIONS:

         It is  important  to note that  after six years of losses  the  Company
reported a profit  before  taxes and  special  charges of $31,344 for the fiscal
year ended September 30, 1997. The Company  attained its goal of $7.2 million in
revenues  for the fiscal  year and  management  expects to match or exceed  that
level of revenues in fiscal year 1998.  Also the Company,  in August  1997,  was
notified of an military  contract  award for the  Marines  that upon  completion
should total approximately $1 million in revenues.

         The loss in 1996 was partially  attributable  to the reduced volume but
was also  impacted by certain  costs that were  non-recurring  in nature.  These
costs,  which represent 46.2% of the loss from operations,  were "CE" mark audit
fees of $108,525,  funds provided for new technology  research at the New Jersey
Institute of Technology  totaling $65,000,  and severance expense for the former
president  of  $33,920.  Management  of the Company  instituted  steps to reduce
operating  costs in fiscal 1997 which  steps  included  reductions  in wages and
payroll taxes due to personnel reductions


                                       26
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997


NOTE 6 - NOTES PAYABLE
                                                            September 30,
                                                            -------------
                                                       1997             1996
                                                   -----------      -----------
A. Board of Directors:
        Notes,  subordinated to NJEDA
        loan,  dated February 6, 1995,
        payable in monthly  installments
        of $5,449  including  interest  
        at 9% per  annum  through 
        September 30, 2001:                        $   262,500      $   262,500
     Less current portion                               43,530           43,530
                                                   -----------      -----------
     Noncurrent portion                            $   218,970      $   218,970
                                                   ===========      ===========

Interest  expense for the fiscal year ended September 30, 1997 and 1996 amounted
to $24,757 and $24,019,  respectively.  No principal  payments  were made due to
these notes being subordinated to the NJEDA loan.

                                                            September 30,
                                                            -------------
                                                       1997             1996
                                                   -----------      -----------
B.  New Jersey Economic Development
      Authority:
      Notes, dated July 31, 1996, payable in
      monthly installments of $1,352
      including interest at 6.75% per
      annum through June 30, 2003:                 $   438,730      $    88,340
     Less current portion                               63,379           10,503
                                                   -----------      -----------
     Noncurrent portion                            $   375,351      $    77,837
                                                   ===========      ===========

Interest  expense for the fiscal year ended September 30, 1997 and 1996 amounted
to $23,066 and $1,042,  respectively.  Future principal payments under the terms
of the agreement are as follows:

                 Fiscal Year                                Amount
                 -----------                              ---------
                     1998                                 $ 63,379
                     1999                                   67,855
                     2000                                   72,647
                     2001                                   77,778
                     2002                                   83,271
                     2003                                   73,800
                                                          --------
                                   TOTAL:                 $438,730
                                                          ========

                                       27

<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997


NOTE 7 - CONCENTRATION OF CREDIT RISK:

         The Company  maintains  cash and cash  equivalents  at three  financial
institutions  that are  insured by the  Federal  Deposit  Insurance  Corporation
(FDIC) and/or Securities Investor Protection  Corporation (SIPC). The Company at
times during the year had amounts in these  institutions that exceeded insurable
limits of $100,000 FDIC and $500,000  SIPC. In the normal course of business the
Company extends unsecured credit to customers in the United States and Asia.

NOTE 8 - COMMITMENTS AND CONTINGENCIES:

         Commitments:

          A.  Retirement Plans:
              Effective July 1, 1989, the Company adopted a defined contribution
              plan for all  eligible  employees.  In  accordance  with  Internal
              Revenue  Code  Section  401(k),  the plan  provides  for  elective
              deferral  of up to 15% of total  compensation.  The  plan  further
              provided  for a  Company  matching  contribution  of  25%  of  the
              elective  deferral amount of each  participant that did not exceed
              6% of total compensation.  Effective January 1, 1994, the matching
              Company  contribution was suspended due to the company's financial
              condition and pending  reorganization.  Effective October 1, 1995,
              the  Company  reinstated  a  matching  contribution  at 50% of the
              elective deferral amount for each participant that does not exceed
              6% of total  compensation.  The amounts charged to operations were
              $37,581 and $46,151  for the years  ended  September  30, 1997 and
              1996, respectively.

          B.  Employee Stock Options Plans:
              On February 26, 1987, the Stockholders approved the 1987 Incentive
              Stock Option Plan,  the 1987 Employee  Stock Purchase Plan and the
              1987 Stock Option Program for Non-Employee  Directors.  Subject to
              the  provisions of these plans,  an aggregate of 150,000 shares of
              the  Company's  stock was made  available  for  option  purchases;
              namely,   75,000  shares,   37,  500  shares  and  37,500  shares,
              respectively.  The  plans  ended  effective  December  1996 and no
              further grants may be made for options.

                                       28
<PAGE>


                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

                                                   Option
                                                   -------
                                Price per Share                 Number of Shares
                                ---------------                 ----------------
Shares under option at
 September 30, 1994                  $3.00                           50,000
   Granted                           $1.0625                        130,000
   Exercised                         $1.0625                        (30,000)
   Expired                           $1.0625                        (18,750)
   Expired/surrender                 $3.00                          (50,000)
                                                                  ---------
Shares under option at
 September 30, 1995                  $1.0625                         81,250
   Exercised                         $1.0625                        (34,500)
   Expired                           $1.0625                           (250)
                                                                  ---------
Shares under option at
 September 30, 1996                  $1.0625                         46,500
   Expired                           $1.0625                        (20,000)
                                                                  ---------
Shares under option at
 September 30, 1997                  $1.0625                         26,500
                                                                  =========

Lease Commitments

                  Subsequent to the sale of the Company's  facility in Randolph,
                  New Jersey on September 28, 1994,  the company  entered into a
                  seven year  lease for its  present  office  and  manufacturing
                  facility  in  Hanover,  New  Jersey  with a five year  renewal
                  option.  Rent charged to operations  for the fiscal year ended
                  September 30, 1997 was  $227,400.  Annual rent for the initial
                  seven  year  term is  $227,400  for the first  four  years and
                  $300,00 for years five through  seven.

                  Future  minimum lease  payments  required  under the operating
                  lease are as follows:

                              Fiscal Year                           Amount
                              -----------                           ------
                                 1998                              $227,400
                                 1999                               300,000
                                 2000                               300,000
                                 2001                               300,000

                  The  Company  leases  office   equipment   under  a  five-year
                  operating  lease with an option to upgrade  after  three years
                  that it intends to exercise.  The annual lease payment for the
                  term of the lease is $17,617.  Future lease payments  required
                  under the operating lease are as follows:

                                       29
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

                              Fiscal Year                           Amount
                              -----------                           ------
                                  1998                              $17,617
                                  1999                               17,617
                                  2000                               17,617
                                  2001                                1,468

Contingencies:
               A. Environmental Contingencies:
                  Following an  investigation  by the New Jersey  Department  of
                  Environmental   Protection  (NJDEP)  of  the  Company's  waste
                  disposal  practices at a certain site that it formerly leased,
                  the Company put a ground water  management plan into effect as
                  approved by the  Department.  Costs  associated with this site
                  are charged directly to income as incurred.  The owner of this
                  site has notified the Company that if the NJDEP  investigation
                  proves to have  interfered  with a sale of the  property,  the
                  owner  may seek to hold  the  Company  liable  for any loss it
                  suffers as a result.  However,  corporate counsel has informed
                  management  that,  in their  opinion,  the  lessor  would  not
                  prevail in any lawsuit  filed due to the  imposition by law of
                  the statute of  limitations.  Cost  charged to  operations  in
                  connection with the water  management plan amounted to $43,173
                  and $51,879 for the years ended  September  30, 1997 and 1996,
                  respectively.  The Company  estimates the expenditures in this
                  regard for the fiscal  year  ending  September  30,  1998 will
                  amount to approximately  $52,000. The Company will continue to
                  be liable  under the plan in all future  years until such time
                  as the  NJDEP  releases  it from  all  obligations  applicable
                  thereto.

              B.  Contingent Subscription and Option Agreement:
                  On  June  30,   1997,   the  Board  of  Directors  of  Boonton
                  Electronics   Corporation   (BEC)   agreed  to  enter  into  a
                  Subscription and Option Agreement with G.E.M. USA, Inc. (GEM),
                  a   wholly-owned   subsidiary  of  General  de  Mesure  et  de
                  Maintenance Electronique,  S.A. (GMME), whereby GEM shall have
                  the option to buy 435,984 shares of the common stock of BEC at
                  an option  price of $3.24 per  share.  The term of the  option
                  agreement  shall be for a period  of two  years.  GEM paid BEC
                  $25,000 for this  option and  simultaneously  purchased  7,716
                  shares of BEC's common stock from the corporation for $25,000.

                                       30

<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

                  Further,  on June 30,  1997,  the  Board of  Directors  of BEC
                  resolved to enter into a Shared Facilities  Agreement with B&K
                  Precision,  Inc.  (B&K), a wholly-owned  subsidiary of GEM, as
                  additional consideration for the above noted option. B&K shall
                  pay BEC a monthly management fee of $15,000 and shall also pay
                  rent at the same  price  per  square  foot as BEC for the area
                  sublet to B&K.  This  agreement  shall reduce  BEC's  overhead
                  costs   substantially  and  shall  improve  BEC's  results  of
                  operations.

                  The effective  date of both of the above noted  agreements was
                  October 1, 1997,  one day  subsequent  to the fiscal year end,
                  September  30, 1997.  The company also received the payment of
                  $50,000 on October 1, 1997.

              C.  Income Tax Contingencies:
                  The Company's income tax returns through the fiscal year ended
                  September 30, 1993 have been accepted as filed.

NOTE 9 - COMMON AND TREASURY STOCK:
<TABLE>
<CAPTION>

                                                                     September 30,
                                                               -------------------------
                                                                 1997             1996
                                                               --------         --------
<S>                                                            <C>              <C>     
              Common Stock:
                  $.10 par value, authorized  5,000,000
                  shares, issued and outstanding 1,636,585
                  shares and 1,556,585 shares, respectively.   $163,659         $155,659
                                                               ========         ========
</TABLE>

NOTE 10 - INCOME TAXES:
              The components of the deferred tax asset are:

                                                     September 30,
                                            -------------------------------
                                                1997                1996
                                            -----------         -----------
Deferred tax asset                          $ 2,867,591         $ 3,799,877
 Less: Valuation allowance                   (1,797,882)         (2,730,168)
                                            -----------         -----------

     Net deferred tax asset                 $ 1,069,709         $ 1,069,709
                                            ===========         ===========

         Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes", requires that the Company record a valuation allowance when it is
"more  likely than not that some  portion or all of the deferred tax assets will
not be realized".  It further states that "forming a conclusion that a valuation
allowance is not needed is  difficult  when there is negative  evidence  such as
cumulative losses in recent years".


                                       31
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

         The ultimate  realization of this deferred  income tax asset depends on
the ability to generate  sufficient taxable income in the future. The Company is
undergoing substantial restructuring changes and has made strategic realignments
of its operations in association with its Plan or Reorganization that management
believes will result in future  profitability.  While it is management's  belief
that  these  measures  will  allow the  total  deferred  income  tax asset to be
realized by future operating results, the losses in recent years and a desire to
be conservative make it appropriate to record a valuation allowance.

         Accordingly,  the Company has provided a valuation  allowance (based on
estimated  future taxable  income) for the portion of the total deferred  income
tax  asset  that  will  not  be  realized  as  related  to  the  operating  loss
carryforward.

         Income tax laws allow for the  utilization of loss  carryforwards  over
periods  not  to  exceed  15  and  7  years  for  Federal  and  State  purposes,
respectively.  If the Company is not able to generate  sufficient taxable income
in the future through operating  results,  increases in the valuation  allowance
will be required through a charge to expense (reducing stockholder's equity). In
the  event  the  Company  reports  sufficient  profitability  to use  all of the
deferred income tax assets, the valuation allowance will be eliminated through a
credit to expense (increasing stockholder's equity).

                                             September 30,
                                             -------------
                                     1997                    1996
                                   ---------               ---------
Current:
    Federal                        $ 443,904               $      --
    State                            129,125                   1,200
                                   ---------               ---------
                                     573,029                   1,200
                                   ---------               ---------
Deferred:
     Federal                        (443,904)                198,510
     State                          (129,125)                 25,363
                                   ---------               ---------
                                    (573,029)                223,873
                                   ---------               ---------
     Total                         $      --               $ 225,073
                                   =========               =========


                                       32
<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

The following is a reconciliation  of income taxes of the federal statutory rate
with income taxes recorded by the Company:
                                                           September 30,
                                                      ----------------------
                                                         1997         1996
                                                      ---------    ---------
Computed income taxes at statutory rate               $ 573,029    $(280,366)
Recognition of net operating loss                      (573,029)    (139,441)
Increase(decrease) in tax asset valuation allowance    (932,286)     651,765
IC-DISC dissolution                                     932,286       (6,885)
                                                      ---------    ---------

Expense (Benefit)                                     $      --    $ 225,073
                                                      =========    =========

         The Company has net operating loss  carryforwards for federal and state
purposes  approximating  $6,266,666 and $8,188,055 that will not begin to expire
until the year  2011and  2003  respectively.  These  loss  carryforwards  can be
utilized to reduce future taxable income dollar for dollar.

         In  May  1997,  the  Company  dissolved  Boonton   International  Sales
Corporation (BIS) (former wholly-owned subsidiary) and received a Certificate of
Dissolution  from the state of New Jersey.  BIS, as an Interest  Charge Domestic
International  Sales Corporation  (IC-DISC),  had $1,456,000 of deferred income.
The deferred  income became  taxable to the Company upon the  dissolution of BIS
and  therefore  reduced the deferred tax asset and related  valuation  allowance
accordingly.

NOTE 11 - SEGMENT INFORMATION:

         The Company is engaged in the  manufacture  and sale of electronic test
and  measurement  equipment  and  management  considers its business as a single
segment for reporting purposes.

 A.   The Company's export sales were as follows:

          Years Ended                                                  % of
          September 30,              Amount                         Total Sales
          -------------              ------                         -----------

              1997                 $2,369,499                          33%
              1996                  2,599,074                          42%
              1995                  2,702,439                          40%



                                       33

<PAGE>

                         BOONTON ELECTRONICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

 B.   Customers sales to domestic government agencies were as follows:

              Years Ended                                             % of
              September 30,                    Amount              Total Sales
              -------------                    ------              -----------

              1997                           $1,514,792                21%
              1996                              907,189                15%
              1995                              636,020                 9%

NOTE 12 - SPECIAL CHARGES:

         In  accordance  with the GMME  agreement,  the Company was  required to
obtain an  agreement,  acceptable  to GMME,  with the New Jersey  Department  of
Environmental  Protection  for  finalizing  the  clean-up  of a site it formerly
leased. In order to fulfill this  requirement,  it was necessary for the Company
to incur and accrue charges of $271,772,  for the year ended September 30, 1996,
from its environmental consultants and counsel that were deemed not to be in the
ordinary course of business. Other components of the total special charge amount
of $350,405  in 1996 were  $45,000 for  anticipated  settlement  for the Sharkey
Landfill and $33,633 penalty from the NJDEP for a missed monitoring event at the
site formerly leased.

NOTE 13 - EARNINGS PER SHARE:

         Earnings/(loss)  per share have been  computed by dividing net earnings
/(loss) by the weighted average number of common shares outstanding of 1,621,462
for 1997, 1,460,730 for 1996 and 1,341,785 for 1995. Options to purchase a total
of 443,700  shares of common stock at $3.24 per share were not included  because
the  exercise  price  exceeded  the average  market  price which would result in
antidilution.  Incentive stock options to purchase 26,500 shares in 1997, 46,500
shares in 1996 and 81,250  shares in 1995 were not  included  because  they were
insignificant.

                                       34

<PAGE>
<TABLE>
<CAPTION>

                                          BOONTON ELECTRONICS CORPORATION
                                           NOTES TO FINANCIAL STATEMENTS
                                                SEPTEMBER 30, 1997


NOTE 14 - QUARTERLY FINANCIAL DATA:

SEPTEMBER 30, 1997                     1ST QTR.           2ND QTR.            3RD QTR.            4TH QTR.
------------------                     --------           --------            --------            --------

<S>                                   <C>                <C>                 <C>                 <C>       
Sales                                 $1,811,075         $1,793,647          $1,798,348          $1,805,987
Gross Profit                             823,780            788,830             744,175             712,173
Net income/(loss)                         25,377             31,204             (15,182)            (10,055)
Earnings/(loss)
  per share                                  .02                .02                (.01)               (.01)

SEPTEMBER 30, 1996                     1ST QTR.           2ND QTR.            3RD QTR.            4TH QTR.
------------------                     --------           --------            --------            --------

Sales                                 $1,632,222         $1,559,269          $1,410,126          $1,436,719
Gross Profit                             803,166            766,387             644,537             415,666
Net income/(loss)                         52,710            (47,683)           (294,884)           (759,822)
Earnings/(loss)
  per share                                  .04               (.04)               (.19)               (.53)
</TABLE>



                                                                 35
<PAGE>

                         BOONTON ELECTRONICS CORPORATION

                             INDEX TO EXHIBITS FILED
                       IN THE ANNUAL REPORT ON FORM 10-KSB
                      FOR THE YEAR ENDED SEPTEMBER 30, 1997

     10.10   Report  on Form  8-K  dated  June  18,  1997  for  "Other
             Events",  "Purchase  of Stock",  effective  June 9, 1997.
             Filed as an Exhibit in the Annual  Report on Form  10-KSB
             for the year ended  September 30, 1997. . . . . . . . . . . . . 37

     10.11   Report  of on Form 8-K  dated  July 7,  1997  for  "Other
             Events",   "Purchase  of  Stock"  and   "Appointment   of
             President and CEO",  effective June 30, 1997. Filed as an
             Exhibit in the Annual  Report on Form 10-KSB for the year
             ended September 30, 1997. . . . . . . . . . . . . . . . . . . . 38

     10.12   Employment Agreement with Yves Guyomar effective April 16
             1997.  Filed as an Exhibit  in the Annual  Report on Form
             10-KSB for the year ended September 30, 1997. . . . . . . . . . 40

     10.13   Shared  Manufacturing  and Facilities  Agreement  between
             Boonton Electronics Corporation and G.E.M. Illinois, Inc.
             dated October 1, 1997.  Filed as an Exhibit in the Annual
             Report on Form  10-KSB for the year ended  September  30,
             1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

     27.     Financial Data Schedule. . . . . . . . . . . . . . . . . . . .. 59


                                       36