UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR QUARTER ENDED JUNE 30, 1997                   COMMISSION FILE NUMBER 1-4334
                 --------------                                          ------

                            SUNAIR ELECTRONICS, INC.
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             FLORIDA                                        59-0780772
---------------------------------                    ------------------------
  (STATE OR OTHER JURISDICTION                           (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)


3101 SW THIRD AVE., FT. LAUDERDALE, FLA.                       33315
----------------------------------------                   --------------
(ADDRESS OR PRINCIPAL EXECUTIVE OFFICE)                      (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE         (954) 525-1505
                                                           --------------

                                      NONE
  ---------------------------------------------------------------------------
      (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
                                  LAST REPORT)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES ( X ) NO ( )


INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE REPORT.


            CLASS                                      OUTSTANDING AT
-----------------------------                     ---------------------------
COMMON STOCK, $0.10 PAR VALUE                     06/30/97 - 3,932,370 SHARES

                                      - 1 -


<PAGE>



                     SUNAIR ELECTRONICS, INC. AND SUBSIDIARY

                                      INDEX
                                      -----
                                                                  PAGE NO.
                                                                  --------
PART I.   FINANCIAL INFORMATION:

         CONSOLIDATED CONDENSED BALANCE SHEETS --
               JUNE 30, 1997 AND SEPTEMBER 30, 1996                   3

         CONSOLIDATED CONDENSED STATEMENTS OF INCOME --
               NINE MONTHS ENDED JUNE 30, 1997 AND 1996               4

         CONSOLIDATED CONDENSED STATEMENTS OF INCOME --
               THREE MONTHS ENDED JUNE 30, 1997 AND 1996              5

         CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS --
               NINE MONTHS ENDED JUNE 30, 1997 AND 1996               6

         NOTES TO CONSOLIDATED CONDENSED FINANCIAL
               STATEMENTS                                           7-8

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
               CONSOLIDATED CONDENSED STATEMENTS                   9-10

PART II.  OTHER INFORMATION                                          11

                                      - 2 -


<PAGE>



                          PART I. FINANCIAL INFORMATION

                     SUNAIR ELECTRONICS, INC. AND SUBSIDIARY
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
ASSETS                                                        06/30/97                9/30/96
------                                                        --------                -------
<S>                                                          <C>                    <C>        
CURRENT ASSETS:
     CASH AND CASH EQUIVALENTS                               $   961,233            $ 1,721,839
     ACCOUNTS AND NOTES RECEIVABLE                             1,300,951                181,173
     INVENTORIES                                               7,164,745              7,402,036
     OTHER PREPAID EXPENSES                                       90,824                150,080
                                                             -----------            -----------

         TOTAL CURRENT ASSETS                                  9,517,753              9,455,128
                                                             -----------            -----------

INVESTMENT IN MARKETABLE SECURITIES                            3,167,591              3,189,094

PROPERTY, PLANT AND EQUIPMENT-NET                                900,003                966,784

OTHER ASSETS                                                       8,602                      0
                                                             -----------            -----------


TOTAL ASSETS                                                 $13,593,949            $13,611,006
                                                             ===========            ===========


LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

     ACCOUNTS PAYABLE AND ACCRUED EXPENSES                   $   222,878            $   247,289
     CURRENT PORTION OF CAPITALIZED LEASE                         24,104                 22,720
                                                             -----------            -----------

         TOTAL CURRENT LIABILITIES                               246,982                270,009
                                                             -----------            -----------

LONG-TERM LIABILITIES:

     LONG-TERM PORTION OF CAPITAL LEASE                           14,699                 33,527
     LONG-TERM PORTION OF INCOME TAXES PAYABLE                   920,000                932,000
                                                             -----------            -----------

         TOTAL LONG-TERM LIABILITIES                             934,699                965,527
                                                             -----------            -----------


SHAREHOLDERS' EQUITY                                          12,412,268             12,375,470

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                     $13,593,949            $13,611,006
                                                             ===========            ===========
</TABLE>

                                      - 3 -


<PAGE>



                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         NINE MONTHS ENDED
                                                                         -----------------
                                                                   06/30/97              06/30/96
                                                                   --------              --------
<S>                                                              <C>                   <C>        
SALES                                                             $2,891,983            $2,463,367
COST OF SALES                                                      1,950,418             1,616,292
                                                                  ----------            ----------

GROSS                                                                941,565               847,075
SELLING, GENERAL & ADMINISTRATIVE EXPENSES                         1,079,309               908,621
                                                                  ----------            ----------

OPERATING INCOME                                                    (137,744)              (61,546)
OTHER INCOME:
     INTEREST INCOME                                                 177,642               178,355
     INTEREST EXPENSE                                                 (2,848)               (4,075)
     OTHER, NET                                                        2,953                 2,386
                                                                  ----------            ----------
INCOME BEFORE PROVISION
 (BENEFIT) FOR INCOME TAXES                                           40,003               115,120

PROVISION (BENEFIT) FOR
 INCOME TAXES                                                          3,200                87,800
                                                                  ----------            ----------


NET INCOME                                                        $   36,803            $   27,320
                                                                  ==========            ==========

AVERAGE SHARES OUTSTANDING                                         3,932,370             3,932,370
EARNINGS PER SHARE                                                $    (0.01)           $     0.01
                                                                  ==========            ==========
</TABLE>

                                      - 4 -


<PAGE>

                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                          ------------------
                                                  06/30/97                 06/30/96
                                                  --------                 --------

<S>                                             <C>                      <C>       
SALES                                            $1,889,123              $  462,995
COST OF SALES                                     1,250,120                 345,545
                                                 ----------              ----------

GROSS PROFIT                                        639,003                 117,450
SELLING, GENERAL & ADMINISTRATIVE EXPENSES          310,091                 328,192
                                                 ----------              ----------

OPERATING INCOME                                    328,912                (210,742)
OTHER INCOME:
     INTEREST INCOME                                 57,000                  62,282
     INTEREST EXPENSE                                  (820)                 35,423
     OTHER, NET                                         830                   1,006
                                                 ----------              ----------

INCOME BEFORE PROVISION
 (BENEFIT) FOR INCOME TAXES                         385,922                (112,031)

PROVISION FOR
 INCOME TAXES                                       130,300                  12,300
                                                 ----------              ----------


NET INCOME                                       $  255,622              $ (124,331)
                                                 ==========              ==========

AVERAGE SHARES OUTSTANDING                        3,932,370               3,932,370
EARNINGS PER SHARE                               $     0.07              $    (0.03)
                                                 ==========              ==========
</TABLE>



                                      - 5 -


<PAGE>



                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                        NINE MONTHS ENDED
                                                        -----------------
                                                   06/30/97         06/30/96
                                                   --------         --------

CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS)                                $    36,803      $    27,320
ADJUSTMENTS TO RECONCILE NET INCOME TO
 NET CASH PROVIDED BY OPERATING ACTIVITIES
       DEPRECIATION AND AMORTIZATION                  75,579           78,311
       CHANGES IN OPERATING ACTIVITIES:
          (INCR)DECR IN ACCOUNTS RECEIVABLE       (1,119,778)         324,226
          (INCR)DECR IN INVENTORY                    237,291          308,173
          (INCR)DECR IN OTHER ASSETS                  72,157           74,522
          (DECR)INCR IN ACCOUNTS PAYABLE AND
                     ACCRUED EXPENSES                (39,616)        (173,798)
          (DECR)INCR IN  ACCRUED INCOME TAX            3,200           43,381
          INCR IN DEFERRED INCOME TAX                      0         (108,800)
                                                 -----------      -----------

NET CASH PROVIDED (USED) BY
  OPERATING ACTIVITIES                              (734,364)         573,335
                                                 -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF PROPERTY, PLANT & EQUIPMENT               (8,798)         (47,759)
SALES (PURCHASES) OF INVESTMENTS - NET                     0       (3,196,261)
                                                 -----------      -----------

NET CASH FROM (USED BY)
INVESTING ACTIVITIES                                  (8,798)      (3,244,020)
                                                 -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
PRINCIPAL PAYMENT OF CAPITAL LEASE                   (17,444)         (16,164)
                                                 -----------      -----------

NET (DECREASE) IN CASH                              (760,606)      (2,686,849)
CASH AT BEGINNING OF PERIOD                        1,721,839        4,408,135
                                                 -----------      -----------


CASH AT END OF PERIOD                            $   961,233      $ 1,721,286
                                                 ===========      ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
      CASH PAID DURING THE PERIOD                $         0      $         0
        FOR INTEREST                             ===========      ===========
      CASH PAID DURING THE PERIOD FOR INCOME
        TAXES                                    $         0      $   160,119
                                                 ===========      ===========



                                      - 6 -


<PAGE>

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.      BASIS OF PRESENTATION
        THE ACCOMPANYING UNAUDITED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN
        ACCORDANCE WITH THE INSTRUCTIONS TO FORM 10-Q AND DO NOT INCLUDE ALL OF
        THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING
        PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS. IN THE OPINION OF
        MANAGEMENT, ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS)
        CONSIDERED NECESSARY FOR A FAIR PRESENTATION HAVE BEEN INCLUDED.
        OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1997 ARE NOT
        NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE
        FISCAL YEAR ENDING SEPTEMBER 30, 1997. FOR FURTHER INFORMATION REFER TO
        THE CONSOLIDATED FINANCIAL STATEMENTS AND FOOTNOTES THERETO INCLUDED IN
        THE COMPANY'S ANNUAL REPORT IN FORM 10-K FOR THE FISCAL YEAR ENDED
        SEPTEMBER 30, 1996.

2.      ACCOUNTING POLICIES
(A)     PRINCIPLES OF CONSOLIDATION-
        THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS
        OF THE COMPANY AND ITS SUBSIDIARY. ALL SIGNIFICANT INTER-COMPANY 
        ACCOUNTS AND TRANSACTIONS HAVE BEEN ELIMINATED IN CONSOLIDATION.

(B)     PROPERTY, PLANT AND EQUIPMENT-
        PROPERTY, PLANT AND EQUIPMENT IS DEPRECIATED OVER THE ESTIMATED USEFUL
        LIVES OF THE ASSETS USING BOTH STRAIGHT-LINE AND ACCELERATED METHODS.

(C)     RESEARCH AND DEVELOPMENT COSTS-
        ALL RESEARCH AND DEVELOPMENT COSTS ARE CHARGED TO EXPENSE AS INCURRED.

(D)     EARNINGS PER COMMON SHARE-
        EARNINGS PER COMMON SHARE ARE COMPUTED BASED ON WEIGHTED AVERAGE NUMBER
        OF SHARES OUTSTANDING DURING EACH PERIOD.

(E)     INVENTORIES-
        INVENTORIES CONSIST OF THE FOLLOWING:
                                                06/30/97             9/30/96
                                               ----------          ----------
                   RAW MATERIALS               $1,543,393          $1,507,724
                   WORK IN PROCESS              3,548,481           3,341,022
                   FINISHED GOODS               2,072,871           2,553,290
                                               ----------          ----------
                                               $7,164,745          $7,402,036
                                               ==========          ==========
(F)     INVESTMENTS-
        INVESTMENTS ARE CARRIED AT COST LESS AMORTIZATION OF PREMIUM (DISCOUNT),
        IF ANY, AND INCLUDE PRIVATE EXPORT FUNDING CORPORATION (PEFCO) NOTES.
        THESE NOTES ARE GUARANTEED BY THE EXPORT-IMPORT BANK OF THE UNITED
        STATES, AN AGENCY OF THE UNITED STATES.


                                      - 7 -


<PAGE>


3.      INCOME TAXES:

        DURING 1995, IT WAS DETERMINED THAT CONTINUED OPERATIONS OF ITS INTEREST
        CHARGE-DOMESTIC INTERNATIONAL SALES CORPORATION (IC-DISC) SUBSIDIARY'S
        ELECTION WAS NO LONGER ADVANTAGEOUS TO THE COMPANY. ACCORDINGLY, THE TAX
        ELECTION OF THE SUBSIDIARY WAS DISCONTINUED AND ITS RETAINED EARNINGS OF
        APPROXIMATELY $3,200,000 WERE DISTRIBUTED TO THE COMPANY. REGULATIONS
        PROVIDE FOR THE TAXATION OF SUCH DISTRIBUTION OVER A TEN YEAR PERIOD IN
        EQUAL ANNUAL INCREMENTS. UPON THE ASSUMPTION THE COMPANY'S BUSINESS IS
        PROFITABLE THROUGHOUT THE TEN YEAR PERIOD, EXCLUDING SUCH INCREMENTAL
        INCOME, THE AGGREGATE INCOME TAX PAYABLE AS A CONSEQUENCE OF SUCH
        DISTRIBUTION WILL APPROXIMATE A MAXIMUM OF $985,000 OR $98,000 PER YEAR.
        INTEREST WILL NO LONGER ACCRUE ON THE UNPAID PORTION OF THE TAX AMOUNT.

4.      PREFERRED STOCKS:

        THE COMPANY HAS 500,000 AUTHORIZED SHARES OF PREFERRED STOCK, NO PAR
        VALUE, THAT MAY BE ISSUED AT SUCH TERMS AND PROVISIONS AS DETERMINED BY
        THE BOARD OF DIRECTORS.

5.      STOCK OPTIONS:

        NONE


                                      - 8 -


<PAGE>



         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

LIQUIDITY:

DURING THE FIRST THREE QUARTERS OF THE CURRENT FISCAL YEAR ENDING JUNE 30, 1997,
THE COMPANY MAINTAINED CASH AND SHORT TERM INVESTMENTS MORE THAN ADEQUATE TO
COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT OCCUR.
DURING THE NINE MONTH PERIOD, CASH AND SHORT TERM INVESTMENTS MAINTAINED AN
AVERAGE BALANCE OF $1,153,042 COMPARED TO AN AVERAGE BALANCE OF $1,626,000 FOR
THE TWELVE MONTHS ENDED SEPTEMBER 30,1996 OR AN AVERAGE BALANCE OF $2,968,000
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1995. SHORT TERM INVESTMENTS ARE TAX
EXEMPT MONEY MARKET FUNDS THAT ARE READILY AVAILABLE FOR IMMEDIATE USE SHOULD
THE OCCASION ARISE. IT IS ANTICIPATED THAT THE COMPANY WILL REMAIN AS LIQUID
DURING THE REST OF FISCAL 1997. INVENTORIES CONTAIN NO OBSOLESCENCE AS
ADJUSTMENTS ARE MADE AS THEY OCCUR. ACCOUNTS AND NOTES RECEIVABLE CONTAIN NO BAD
DEBTS. INTERIM RESERVES ARE MAINTAINED TO COVER CANCELLATION CHARGES UNPAID AND
ANY FREIGHT CHARGE DISPUTES. ALL MONETARY TRANSACTIONS ARE IN U.S. DOLLARS AND
NO LETTERS OF CREDIT INVOLVE FOREIGN EXCHANGE.

CAPITAL RESOURCES:

DURING THE FIRST NINE MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED
$8,798 FOR CAPITAL ASSETS. NO EXPENDITURES ARE CONTEMPLATED FOR PLANT EXPANSION
OR EXTENSIVE MAINTENANCE. THE COMPANY HAS NO LONG TERM DEBT AND NONE IS
CONTEMPLATED OTHER THAN THE LEASE OF THE COMPUTER. LIABILITIES CONSIST OF
CURRENT ACCOUNTS PAYABLE AND EXPENSES RELATED TO THE CURRENT ACCOUNTING PERIOD
AND THE CAPITAL LEASE.

RESULTS OF OPERATIONS:

DURING THE THIRD QUARTER OF THE CURRENT FISCAL YEAR ENDED JUNE 30, 1997,
SHIPMENTS WERE $1,889,123 UP FROM $540,279 FOR THE QUARTER ENDED MARCH 31, 1997.
SHIPMENTS FOR THE NINE MONTHS ENDED JUNE 30, 1997 WERE $2,891,983, UP FROM
$2,463,367, OR 17.4% FOR THE SAME PERIOD ONE YEAR AGO AND UP $990,856 OR 52.1%
FROM THE NINE MONTHS ENDED JUNE 30, 1996. EXPORT SHIPMENTS FOR THE NINE MONTHS
ENDED JUNE 30, 1997 WERE $1,861,736 OR 64.4% OF TOTAL SALES, UP $247,952 OR
15.4% FROM THE SAME PERIOD ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE NINE MONTHS
OF THE CURRENT FISCAL YEAR WERE $1,030,247 OR 21.3% AHEAD OF SHIPMENTS FOR THE
SAME PERIOD ONE YEAR AGO OF $849,583. SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES INCREASED $170,688 FROM THE SAME PERIOD ONE YEAR AGO

                                      - 9 -


<PAGE>



RESULTS OF OPERATIONS: (CONTINUED)

DUE TO INCREASED MARKETING EFFORTS AND INCREASED PERSONNEL. THE DIRECT LABOR
FORCE CONTINUES AT A REDUCED LEVEL DUE TO SUFFICIENT INVENTORY LEVELS IN
FINISHED GOODS.

SHIPMENTS WERE HIGHER FOR THE QUARTER DUE MAINLY TO A LARGE SHIPMENT TO A
NORTH AFRICAN CUSTOMER OCCURRING IN APRIL.  THE BACK LOG OF JUNE 30, 1997 WAS
$270,388.  NEGOTIATIONS CONTINUE FOR PROGRAMS WITH THE U.S. GOVERNMENT AS
WELL AS INTERNATIONAL CUSTOMERS.

FOCUS CONTINUES ON INTERNATIONAL OPPORTUNITIES.  SUNAIR HAS BEEN SHORT LISTED
ON A NUMBER OF LARGE PROGRAMS.  THE COMPANY IS OPTIMISTIC AS NEGOTIATIONS
CONTINUE ON THESE PROGRAMS AS WELL AS FOR NEW OPPORTUNITIES WHICH CONTINUE TO
SURFACE.  EMPHASIS IS PLACED ON FULLY INTEGRATED SYSTEMS CAPABILITIES WITH
COMPUTER BASED RELIABLE, ERROR FREE, AUTOMATIC HIGH SPEED DATA AND FACSIMILE
CAPABILITIES.  THIS AREA SHOWS GOOD GROWTH POTENTIAL.





                                     - 10 -


<PAGE>



                            PART II OTHER INFORMATION



5.     OTHER INFORMATION

       ON JULY 30, 1997 THE FOLLOWING PRESS RELEASE WAS ISSUED FOR IMMEDIATE
       RELEASE: ROBERT URICHO, JR., CHAIRMAN OF SUNAIR ELECTRONICS, INC. (SNR)
       TODAY ANNOUNCED HE HAD RECEIVED AN UNSOLICITED OFFER TO PURCHASE HIS
       APPROXIMATELY 50.7% OF THE COMPANY'S OUTSTANDING STOCK AT $4.25 A SHARE.
       THIS OFFER HAS BEEN TENTATIVELY ACCEPTED CONTINGENT UPON APPROVAL OF THE
       BOARDS OF DIRECTORS AND COUNSELS OF BOTH PARTIES.

6.     EXHIBITS AND REPORTS ON FORM 8-K

       NONE

                                     - 11 -


<PAGE>


                                   SIGNATURES
                                   ----------


PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.


                                             SUNAIR ELECTRONICS, INC.


                                                       
      DATE  August 11, 1997                   /s/ ROBERT URICHO, JR.
           ----------------                   ---------------------------------
                                                  ROBERT URICHO, JR., PRINCIPAL
                                                         EXECUTIVE OFFICER


                                                  
      DATE  August 11, 1997                   /s/ SYNNOTT B. DURHAM
            ---------------                   ---------------------------------
                                                  SYNNOTT B. DURHAM, PRINCIPAL
                                                       ACCOUNTING OFFICER

                                     - 12 -