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

                    ----------------------------------------

                                    FORM 10-Q

  _X_     QUARTERLY REPORT PURSUANT TO SECTION 13 OR
          15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the quarterly period ended December 31, 1997

  ___     TRANSITION REPORT PURSUANT TO SECTION 13 OR
          15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          Commission File No. 33-18978

                        TEL-INSTRUMENT ELECTRONICS CORP.
             (Exact name of the Registrant as specified in Charter)

          New Jersey                                          22-1441806
          (State of Incorporation)                   (I.R.S. Employer ID Number)

          728 Garden Street, Carlstadt, New Jersey            07072
          (Address of Principal Executive Offices)          (Zip Code)

          Registrant's Telephone No. including Area Code: 201-933-1600

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 the issuer's  common stock,  as of
the latest practical date:

2,052,781 shares of Common stock, $.10 par value as of  February 6, 1998.

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

Item 1. Financial Statements (Unaudited)

        Condensed Comparative Balance Sheets
        December 31, 1997 and March 31, 1997                                 1

        Condensed Comparative Statements of Operations -
        Three and Nine Months Ended December 31, 1997
        and December 31,1996                                                 2

        Condensed Comparative Statements of Cash Flows -
        Nine Months Ended December 31, 1997 and
        December 31, 1996                                                    3

        Notes to Condensed Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition
        And Results of Operations                                            5-8

        Part II Other Information                                            9

        SIGNATURES                                                           9

<PAGE>

Item 1 - Financial Statements

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
                      CONDENSED COMPARATIVE BALANCE SHEETS)
                                   (Unaudited)

                      December 31, 1997 and March 31, 1997

                                                    December 31,    March 31,
                                                       1997           1997
                                                    -----------    -----------
                          ASSETS
Current assets:
   Cash                                             $   463,058    $   528,636
   Accounts receivable, net of allowance 
   for doubtful accounts of $16,074 at 
   December 31, 1997 and  $65,521 at 
   March 31, 1997                                       785,590        302,737
   Inventories                                          397,491        352,173
   Other current assets                                  25,538          6,944
   Deferred income tax benefit - current                 78,300         78,300
                                                    -----------    -----------
      Total current assets                            1,749,977      1,268,790

Office and manufacturing equipment, net                  83,492         45,492
Other assets, net                                        86,884         71,884
Deferred income tax benefit                              29,602        261,900
                                                    -----------    -----------
      Total assets                                    1,949,955      1,648,066
                                                    ===========    ===========

      LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
   Advanced billings                                     57,061           --
   Accrued payroll, deferred wages and
     vacation pay                                       336,685        342,432
   Accounts payable and accrued expenses                379,174        485,380
                                                    -----------    -----------
      Total current liabilities                         772,920        827,812

Convertible subordinated notes - related parties
      Total liabilities                                 365,000        365,000
                                                    -----------    -----------
                                                      1,137,920      1,192,812
                                                    ===========    ===========
Stockholders' equity:
   Common stock                                         205,281        203,097
   Additional paid-in capital                         3,907,056      3,901,052
   Accumulated deficit                               (3,300,302)    (3,648,895)
                                                    -----------    -----------
   Total stockholders' equity                           812,035        455,254
                                                    -----------    -----------
   Total liabilities and stockholders' equity       $ 1,949,955    $ 1,648,066
                                                    ===========    ===========

See accompanying notes to condensed financial statements.


                                       1
<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
                 CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Three Months Ended                Nine Months Ended
                                         ------------------------------    ------------------------------
                                          December 31,     December 31,     December 31,     December 31,
                                              1997             1996             1997             1996
                                         -------------    -------------    -------------    -------------
<S>                                      <C>                    <C>        <C>                  <C>      
Sales
   Government, net                       $   1,133,538          672,740    $   2,258,243        1,457,114
   Commercial, net                             348,495          267,996          938,654          718,830
                                         -------------    -------------    -------------    -------------
Total sales                                  1,482,033          940,736        3,196,897        2,175,944

Cost of sales                                  505,202          414,320        1,193,096          918,472
                                         -------------    -------------    -------------    -------------
Gross margin                                   976,831          526,416        2,003,801        1,257,472

Operating expenses
   Selling, general & administrative           334,208          221,904          737,383          634,009
   Engineering, research & development         284,309          117,734          648,235          338,063
                                         -------------    -------------    -------------    -------------
Total operating expenses                       618,517          339,638        1,385,618          972,072

Profit from operations                         358,314          186,778          618,183          285,400

Other income (expense):
   Interest income                               6,145                6           17,878              615
   Interest expense                            (17,578)         (15,017)         (55,170)         (48,124)
                                         -------------    -------------    -------------    -------------
Income before taxes                            346,881          171,767          580,891          237,891

Provision for income taxes                     138,834             --            232,298             --
                                         -------------    -------------    -------------    -------------
Net income                               $     208,047          171,767    $     348,593          237,891
                                         =============    =============    =============    =============
Basic and diluted earnings 
  per share                              $        0.10             0.08    $        0.17             0.13
Dividends per share                               None             None             None             None
Weighted average shares outstanding          2,093,989        2,049,629        2,089,656        1,866,785
</TABLE>

See accompanying notes to condensed finanical statements


                                       2
<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
                 CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                     December 31,
                                                                  1997         1996
                                                                ---------    ---------
<S>                                                             <C>          <C>      
Increase (decrease) in cash:
Cash flows from operating activities
Net income                                                      $ 348,593    $ 237,891
Adjustments to reconcile net income to cash provided
   by operating activities:
    Deferred income taxes                                         232,298         --
    Depreciation                                                   24,483       18,344
    Disposal of sales equipment                                      --          2,093

Changes in assets and liabilities:
 (Increase) decrease in accounts receivable, net                 (482,853)     105,551
 (Increase) decrease in inventories                               (45,318)       4,467
 (Increase) decrease in other current assets                      (18,594)      (6,348)
 (Increase) decrease in other assets                              (15,000)       1,124
 Increase in advanced billings                                     57,061         --
 Increase (decrease) in accrued payroll, deferred wages
     and vacation pay                                              (5,747)    (117,358)
 (Decrease) increase in accounts payable and accrued expenses    (106,206)     (68,637)
                                                                ---------    ---------
Net cash (used in) provided by operations                         (11,283)     177,127
                                                                ---------    ---------
Cash flows from investing activities:
  Purchases of office and manufacturing equipment                 (62,483)     (33,938)
                                                                ---------    ---------
Net cash used in investing activities                             (62,483)     (33,938)
                                                                ---------    ---------
Cash flows from financing activities:
Proceeds from exercise of stock options                             8,188         --
 Proceeds from issuance of common stock                              --         87,500
                                                                ---------    ---------
 Net cash provided by financing activities                          8,188       87,500
                                                                ---------    ---------

Net (decrease) increase in cash                                   (65,578)     230,689
Cash at beginning of period                                       528,636       22,625
                                                                ---------    ---------

Cash at end of period                                           $ 463,058    $ 253,314
                                                                =========    =========

Interest Paid:                                                  $  45,041    $  61,173
                                                                =========    =========
Non-Cash Items:
 Preferred stock redeemed and exchanged for common stock        $    --      $ 606,643
 Stock issued to related party for liabilities                  $    --      $  46,540

</TABLE>

See accompanying notes to condensed financial statements.


                                       3
<PAGE>

                        TEL-INSTRUMENT ELECTRONICS CORP.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1    Basis of Presentation

In the opinion of management,  the accompanying  unaudited  condensed  financial
statements  contain  all  adjustments   (consisting  only  of  normal  recurring
accruals)  necessary to present fairly the financial  position of Tel-Instrument
Electronics  Corp. as of December 31, 1997,  the results of  operations  for the
three and nine  months  ended  December  31, 1997 and  December  31,  1996,  and
statements  of cash  flows  for the nine  months  ended  December  31,  1997 and
December 31, 1996.  These results are not necessarily  indicative of the results
to be expected for the full year.

The financial  statements have been prepared in accordance with the requirements
of Form 10-Q and  consequently  do not include  disclosures  normally made in an
Annual Report on Form 10-K. The March 31, 1997 amounts included herein have been
derived from the audited financial  statements  included in the Company's annual
report on Form 10-K. The financial statements included herein should be reviewed
in conjunction  with the financial  statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997.

Note 2    Inventories

Inventories consist of:

                                                  December 31,        March 31, 
                                                          1997             1997
                                                  ------------------------------
              Purchased parts                       $  289,213     $    213,842
              Work-in-process                          176,583          206,750
              Less: Reserve for obsolescence          (68,305)         (68,419)
                                                  ------------------------------
                                                    $  397,491     $    352,173
                                                  ==============================
              
Note 3    Reclassifications

Certain  reclassifications  have been  made to the  fiscal  year 1997  financial
statements  to be  consistent  with the  fiscal  year 1998  presentation.  These
reclassifications have no effect on the financial results.

Note 4    Income Taxes

At March 31,  1997,  the  Company,  in  accordance  with FASB 109,  reduced  the
valuation  allowance and  recognized a deferred  income tax benefit of $340,200.
The  recognized   deferred  income  tax  benefit  is  based  upon  the  expected
utilization of net operating loss  carryforwards  as the Company  believes it is
more likely than not that it will realize a portion of its net operating  losses
before they  expire.  For the nine months ended  December 31, 1997,  the Company
recorded  a  provision  for  income  taxes of  $232,298,  which  represents  the
effective federal and state tax rate on the Company's net income before taxes of
$580,891.  The Company has no tax liability.  The $232,298 tax provision reduced
the Company's  deferred income tax by the same amount at December 31, 1997. This
amount  represents a portion of the net operating loss  carryforward tax benefit
as stated on the  March 31,  1997  balance  sheet  that the  Company  previously
recognized for financial  statement reporting purposes and expects to utilize in
the future for tax  reporting  purposes.  


                                       4
<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         POSITION AND RESULTS OF OPERATIONS

Results of Operations

The Company has  continued to increase  sales and income from  operations  while
increasing  its research and  development  expenditures,  which grew by over 91%
from the prior fiscal year,  to over 20% of sales.  This  investment in research
and  development is necessary to perform on existing  contracts,  to sustain the
growth and profitability of the Company,  and to continue producing  innovative,
state-of-the-art  products.  This increase includes several temporary  engineers
employed to finalize the U.S. Navy T-47M design, as mentioned below.

The Company  continues to focus its principal  efforts in the government  market
and has been very active in responding to requests for quotation,  from the U.S.
Government,  in  addition to  adapting  its product  designs to respond to these
requests.

On August 12, 1997 the Company  received notice that it had been awarded a major
contract from the U.S.  Navy.  The initial order is for $949,324 to provide five
T-47M IFF test  sets,  for Navy  evaluation,  and for the  associated  tests and
documentation.  This work, to be completed during calendar year 1998, represents
a major  milestone for the Company  since this  contract  could be a significant
source of future revenues.  This contract includes options for up to 1,300 units
which the Navy can exercise  through the year 2001.  There is no assurance  that
these options will be exercised by the Navy.

In the third  quarter of the  current  fiscal  year the  Company  fulfilled  its
obligation  and  delivered  the final units of the T-30CM to the U.S. Air Force.
Sales  derived from this  contract  represented  35% of total sales for the nine
months  ended  December  31, 1997 as compared to 46% for fiscal year 1997.  As a
result,  the next  several  quarters  may not exhibit the growth the Company has
experienced  over the last few years.  However,  while the Company believes that
the  future  still  remains  positive  based  on the  Navy  contract  and  other
outstanding  proposals,  there  can  be  no  assurance  that  these  sales  will
materialize.

Sales

Sales increased  $541,297 (57.5%) and $1,020,953  (46.9%) for the three and nine
months ended  December 31, 1997,  respectively,  as compared to the same periods
last  year.  The sales  increases  were both in the  government  and  commercial
markets.  Government  sales  increased  $460,798  (68.5%) and  $801,129  (55.0%)
related to contracts with the government and from several  Department of Defense
prime  contractors.  Commercial  sales  increased  $80,499  (30.0%) and $219,824
(30.6%) for the three and nine months ended December 31, 1997, respectively , as
compared to the three and nine months ended December 31, 1996.  These  increases
cannot be assured for the future.

During the first quarter of the current  fiscal year the Company had  identified
certain  technical  issues with one of its  products  scheduled  to be delivered
during the second quarter.  The Company  corrected such technical issues and all
of the remaining  units were shipped  during the third quarter.  As such,  these
delayed shipments had a positive affect on the third quarter results.


                                       5
<PAGE>

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          POSITION AND RESULTS OF OPERATION

Sales (continued)

The  Company  continues  to explore  expansion  into  other  markets in order to
capitalize on its test equipment technology.

Gross Margin

Gross margin  increased  $450,415 (85.6%) and $746,329 (59.4%) for the three and
nine months  ended  December  31,  1997,  respectively,  as compared to the same
periods in the prior fiscal  year.  Gross margin as a percent of sales was 65.9%
and 62.7% for the three and nine months ended  December 31, 1997,  respectively,
as compared to 56.0% and 57.8% for the three and nine months ended  December 31,
1996,  respectively.  The increase in gross margin primarily reflects the higher
volume and cannot be assured for the future.

Operating Expenses

Selling,  general,  and  administrative  expenses increased $112,304 (50.6%) and
$103,374  (16.3%)  for the three and nine  months  ended  December  31,  1997 as
compared to the prior fiscal year.  These  increases  are the result of expenses
incurred related to the Company's efforts to explore  additional markets for its
technology,   additional  employee  incentive  compensation,  and  higher  sales
commissions.  These  increases  were  partially  offset  by  lower  selling  and
administrative   salaries.   Engineering,   research  and  development  expenses
increased  $166,575  (141.4%) and $310,172 (91.7%) for the three and nine months
ended  December 31, 1997 as compared to the prior fiscal  year,  reflecting  the
Company's  commitment  and  effort  to  develop  new  products,  especially  the
aforementioned contract with the U.S. Navy.

Interest Income

Interest income increased as a result of higher cash balances.

Income Before Taxes

Income  before taxes  increased  $175,114 to $346,881 for the three months ended
December 31, 1997,  and $343,000 to $580,891 for the nine months ended  December
31, 1997 as compared to the same period last year.

Provision For Income Taxes

A provision for income taxes was not recognized in the prior fiscal year because
the Company applied a full valuation  allowance.  At March 31, 1997, the Company
reduced the valuation  allowance and recorded the resulting  deferred income tax
benefit. For the nine months ended December 31, 1997, the Company has


                                       6
<PAGE>

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          POSITION AND RESULTS OF OPERATION

Provision For Income Taxes (continued)

recorded a provision for income taxes utilizing  estimated effective Federal and
State income tax rates for fiscal year 1998.  The Company has no tax  liability.
The Company  will  continue to monitor the amount of deferred  tax benefit  (net
operating  loss  carryforward)  which can be  currently  recognized  from future
taxable income.

Net Income

Net income for the three  months  ended  December 31, 1997 was $208,047 or $0.10
per share, as compared to $171,767 or $0.08 per share for the three months ended
December  31, 1996.  Net income for the nine months ended  December 31, 1997 was
$348,593  or $0.17 per share as  compared to $237,891 or $0.13 per share for the
nine months ended  December 31, 1996.  The  improvement in net income per common
share was partially  offset by the increase in the number of shares  outstanding
and by the tax provision. Net income for the nine months ended December 31, 1997
was reduced by a $232,298 tax provision as described in the preceding paragraph.
The net income for the comparable fiscal 1997 period was not reduced.

Liquidity and Capital Resources

At December  31, 1997 the Company had  positive  working  capital of $977,057 as
compared  to  $440,978  at March 31,  1997.  The  Company's  financial  position
continues to improve.  The Company's net worth  improved to $812,035 at December
31, 1997 as compared to $455,254 at March 31,  1997.  For the nine months  ended
December 31, 1997,  cash flows from  operations used $11,283 of cash as compared
to providing  cash of $177,127  during the nine months ended  December 31, 1996.
This  decrease in  operating  cash flows  resulted  from  increases  in accounts
receivable of $482,853 and decreases in accounts payable and accrued expenses of
$106,206.  The  increase  in  accounts  receivable  is  directly  related to the
increase in sales and the decrease in accounts  payable and accrued  expenses is
due to  significant  payments  made to vendors  upon the  completion  of certain
contracts.  These uses of cash were offset by the Company's  income before taxes
and depreciation expense of $605,374.

The  Company  continues  to  devote  its  efforts  to  new  product  and  market
development,  and to explore opportunities to improve its profitability and cash
flow. Based upon the current backlog and cash on hand, the Company believes that
it should have  sufficient  working capital to fund its plans for the next year.
At present, the Company does not expect to incur significant long-term needs for
capital outside of its normal operating activities.

The  Company  received  in the  current  fiscal  quarter  approval  to apply for
progress payments on the contract with the U.S. Navy.

These  financial  statements  should be read in  conjunction  with the Company's
Annual Report on Form 10-K to the  Securities  and Exchange  Commission  for the
year ended March 31, 1997.


                                       7
<PAGE>

Market Information

There has been no  established  public trading  market for  Registrant's  Common
Stock.  Subsequent  to the public  offering  of the  Company's  Common  Stock in
December 1988, the Common Stock has traded sporadically in the  over-the-counter
market.  During the fiscal quarter ended December 31, 1997, the Company's Common
Stock was  reported  as  having  the high and low  trades  of $1.94  and  $1.25,
respectively.  These trades reflect reported  inter-dealer prices without retail
markup or commission.

Part II Other Information

Item 4. Submission of Matters to a Vote of Security Holders

(a) The Annual Meeting of Shareholders was held on December 3, 1997 (the "Annual
Meeting").

(b) Not applicable because (i) proxies for the Annual Meeting were not solicited
pursuant to Regulation 14A under the  Securities and Exchange Act of 1934;  (ii)
there was no solicitation  in opposition to  management's  nominees as listed in
the Company's proxy statement; and (iii) all of such nominees were elected.

(c) At the  Annual  Meeting,  the  Company's  shareholders  voted  in  favor  of
management's nominees for election as directors of the Company as follows:

                                             For                    Against
                                             ---                    -------
Harold K. Fletcher                        1,388,721                    0
Robert J. Walker                          1,388,721                    0
George F. Leon                            1,388,721                    0

The shareholders also voted all 1,388,721 shares in favor of Coopers and Lybrand
as the  Corporation's  certified  public  accountants for the fiscal year ending
March 31, 1998.

The  shareholders  also  voted all  1,388,721  shares  for  ratification  of the
Company's issuance of 10% convertible notes, in aggregate amount of $350,000, to
Harold K. Fletcher.

(d) Not applicable.


                                       8

<PAGE>

Item 6. Exhibits and Reports on Form 8-K

          (a)  The exhibits filed or  incorporated  by reference as part of this
               Quarterly Report on Form 10-Q are listed in the attached Index to
               Exhibits.

          (b)  During the quarter ended  December 31, 1997,  the Company did not
               file any current Reports on Form 8-K.

SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                  TEL-INSTRUMENT ELECTRONICS CORP.

Date: 12 February 1998            /s/ Harold K. Fletcher
                                  ---------------------
                                      Harold K. Fletcher
                                      Chairman and President


                                        9