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 September 28, 1996

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

          Commission File No. 33-18978

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
             (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 each of the  issuer's  classes of
common stock, as of the latest practical date:

    1,961,246 shares of Common stock, $.10 par value as of November 5, 1996.


<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

Financial Statements (Unaudited)

Condensed Comparative Balance Sheets
 September 28, 1996 and March 31, 1996                                       1

Condensed Comparative Statements of Operations -
 Three and Six Months Ended  September 28, 1996 and September 30,1995        2

Condensed Comparative Statements of Cash Flows -
 Three and Six Months Ended September 28, 1996 and September 30, 1995       3-4

Notes to Condensed Financial Statements                                      5

Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                                  6-7

Signature                                                                    8


<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                      CONDENSED COMPARATIVE BALANCE SHEETS
                                   (Unaudited)

                                                    September 28,    March 31,
                                                         1996           1996
                                                     -----------    -----------
ASSETS
Current assets:
   Cash                                              $   206,489         22,625
   Accounts receivable, net                              126,540        359,494
   Inventories                                           445,070        346,874
   Other current assets                                    3,262          7,135
                                                     -----------    -----------

         Total current assets                            781,361        736,128

Office and manufacturing equipment, net                   46,267         41,825
Other assets, net                                         45,526         46,653
                                                     -----------    -----------

         Total assets                                    873,154        824,606
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Convertible subordinated note - related party          30,000         30,000
   Convertible subordinated note                          35,000         35,000
   Accrued payroll, deferred wages and vacation pay      422,130        590,353
   Accounts payable and accrued expenses                 597,581        580,974
                                                     -----------    -----------

       Total current liabilities                       1,084,711      1,236,327

Note payable - related pary                              100,000        100,000
Redeemable preferred stock                                     0        606,643
                                                     -----------    -----------

       Total liabilities                               1,184,711      1,942,970
                                                     -----------    -----------

Stockholders' deficiency:
   Common stock                                          196,127        160,383
   Additional paid-in capital                          3,856,371      3,151,432
   Accumulated deficit                                (4,364,055)    (4,430,179)
                                                     -----------    -----------

   Total stockholders' deficiency                       (311,557)    (1,118,364)
                                                     -----------    -----------
   Total liabilities and stockholders' deficiency        873,154        824,606
                                                     ===========    ===========


See accompanying notes to condensed financial statements

                                       1


<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                 CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months Ended                  Six Months Ended

                                             September 28,     September 30,     September 28,     September 30,
                                                     1996              1995              1996              1995
                                               ----------        ----------        ----------        ----------
<S>                                               <C>               <C>               <C>               <C>    
Sales:                                                                                             
   Government, net                                353,355           259,403           784,374           601,741
   Commercial, net                                248,266           333,745           450,834           618,775
                                               ----------        ----------        ----------        ----------
Total sales                                       601,601           593,148         1,235,208         1,220,516
                                                                                                   
Cost of sales                                     224,558           238,570           504,152           499,908
                                               ----------        ----------        ----------        ----------
                                                                                                   
   Gross margin                                   377,043           354,578           731,056           720,608
                                                                                                   
Operating expenses                                                                                 
   Selling, general and administrative            196,740           173,487           412,105           375,798
   Engineering, research and development          109,078            89,246           220,329           179,293
                                               ----------        ----------        ----------        ----------
                                                                                                   
Total operating expenses                          305,818           262,733           632,434           555,091
                                               ----------        ----------        ----------        ----------
                                                                                                   
   Profit (loss) from operations                   71,225            91,845            98,622           165,517
                                                                                                   
Other income (expenses):                                                                           
   Interest income                                    384               185               609               185
   Interest expense                               (16,221)          (17,966)          (33,107)          (35,476)
                                               ----------        ----------        ----------        ----------
        Net profit (loss)                          55,388            74,064            66,124           130,226
                                               ==========        ==========        ==========        ==========
                                                                                                   
Earnings per share                                   0.03              0.05              0.04              0.08
Dividends per share                                  None              None              None              None
Weighted average shares outstanding             1,782,526         1,603,806         1,705,932         1,603,806

</TABLE>

See accompanying notes to condensed financial statements

                                       2

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                 CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      Six Months Ended

                                                                September 28,    September 30,
                                                                        1996             1995
                                                                  ----------       ----------
<S>                                                                <C>              <C>      
Increase (decrease) in cash:                                                     
Cash flows from operating activities:                                            
   Cash received from customers                                    1,479,138        1,194,547
   Cash paid to vendors and employees                             (1,307,035)      (1,168,197)
   Interest received                                                     609              183
   Interest paid                                                     (60,152)          (1,494)
                                                                  ----------       ----------
                                                                                 
   Net cash provided by operating activities                         112,560           25,039
                                                                                 
Cash flows from investing activities:                                            
   Cash purchases of property, plant and equipment                   (16,196)          (3,455)
                                                                                 
   Net cash used in investing activities                             (16,196)          (3,455)
                                                                                 
Cash flows from financing activities:                                            
   Repayment of debt                                                       0          (16,667)
   Proceeds from issuance of common stock                             87,500                0
                                                                  ----------       ----------
   Net cash provided by (used in) financing activities                87,500          (16,667)
                                                                  ----------       ----------
                                                                                 
Net Increase in cash                                                 183,864            4,917
Cash at beginning of period                                           22,625           38,768
                                                                  ----------       ----------
Cash at end of period                                                206,489           43,685
                                                                  ==========       ==========
Non Cash items:
   Preferred stock redeemed & exchanged for common
      stock                                                          606,643                0
   (See Liquidity and Common Resources Section)
   Stocks issued to related party for liabilities due                 46,540                0

</TABLE>

See accompanying notes to condensed financial statements.

                                       3
<PAGE>

                        TEL-INSTRUMENT ELECTRONICS CORP.

            CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS, Continued
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Six Months Ended

                                                                                 September 28,      September 30,
                                                                                         1996               1995
                                                                                     --------           --------
<S>                                                                                    <C>               <C>    
Net profit (loss)                                                                      66,124            130,226
   Adjustments                                                                                       
       Depreciation                                                                    11,754              8,309
                                                                                                     
Changes in assets and liabilities:                                                                   
    Decrease (increase) in accounts receivable                                        232,954            (33,698)
    (Increase) decrease in inventories                                                (98,196)            37,066
    Decrease in other current assets                                                    3,873              2,292
    Decrease (increase) in other assets                                                 1,127             (1,129)
    Increase (decrease) in accounts payable and accrued expenses                       16,607           (144,481)
    (Decrease) increase in accrued payroll, deferred wages and vacation pay          (121,683)            26,454
                                                                                     --------           --------
                                                                                                     
Net cash provided by operating activities                                             112,560             25,039
                                                                                     ========           ========
</TABLE>
                                                
                                       4

See accompanying notes to condensed financial statements.

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1

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 September 28, 1996,  the results of operations  for the
three and six  months  ended  September  28,  1996 and  September  30,  1995 and
statements  of cash  flows  for the six  months  ended  September  28,  1996 and
September 30, 1995. These results are not necessarily  indicative of the results
to be expected for the full year.

These statements  should be read in conjunction with the Company's Annual Report
to the Securities and Exchange  Commission on Form 10-K for the year ended March
31, 1996.

Note 2

Certain  reclassifications have been made to the 1996 financial statements to be
consistent with the fiscal year 1997 presentation.

Note 3

In July,  1996 a group  of  employees  and  creditors  agreed  to  purchase  the
preferred stock and to exchange such stock for common stock of the Company. (See
Liquidity and Capital Resources Section).

Note 4

The President of the Company obtained 62,053 shares as part of the offer made to
all stockholders (See Liquidity and Capital Resources Section) in exchange for a
reduction in liabilities due in the amount of $46,540.



                                       5
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION
RESULTS OF OPERATION

Sales

Net sales  increased  $8,453  (1.4%)  and  $14,692  (1.2%) for the three and six
months ended September 28, 1996,  respectively,  as compared to the same periods
in the prior fiscal year.  The increase in sales is attributed to the government
segment for  shipments  associated  with a contract  with the United  States Air
Force. The uncertainty of the commercial  segment continues and led to a decline
in commercial sales which offset most of the increase in government sales. While
sales  increased,  the stagnant  conditions  experienced  in both the commercial
airline and government  segments  continue.  In fiscal year 1995 the Company was
awarded an open  quantity  contract  by the U.S.  Air Force to which firm orders
have been received in the amount of $1,890,488.  Shipments against this contract
began in the first  quarter  of fiscal  year 1996 and will  continue  beyond the
current fiscal year. Both commercial and government  sales were held down in the
quarter  because of missed  shipments of key parts by one vendor whose  problems
have since been  remedied.  These missed  shipments  will be shipped in the next
quarter  causing better than expected sales for that quarter.  The future growth
and  profitability  continue to be dependent on a turnaround  of the  commercial
airline market,  the introduction and acceptance of new products,  and the award
of additional government contracts.

Gross Margin

Gross margin  increased  $22,465 (6.3%) and $10,448 (1.4%) for the three and six
months ended September 28, 1996, respectively,  as compared to the corresponding
periods in the prior  fiscal year.  This  increase is  attributed  to the higher
volume,  sale of  higher  margin  products,  and the  additional  absorption  of
overhead  expenses.  The gross  margin  percentage  was 59.1% for the six months
ended September 28, 1996 as compared to 59.0% for the same period last year. The
higher  percentage  gross margin is not expected to continue as the lower margin
products for the Air Force contract become a higher percentage of shipments.

Operating Expenses

Total selling, general and administrative expenses increased $23,253 (13.4%) and
$36,307  (9.7%)  for  the  three  and  six  months  ended  September  28,  1996,
respectively,  as compared to the same  periods in the prior  fiscal  year.  The
increase  is  attributed  to an  increase in selling  expenses  and  commissions
associated  with  government  sales.   Engineering,   research  and  development
expenditures  increased  $19,832 (22.2%) and $41,036 (22.9%) for the same period
due to increased new product development efforts.

The net income for the three  months  ended  September  28,  1996 was $55,388 or
$0.03 per share as  compared  to a net  income of $74,064 or $0.05 per share for
the three months ended September 30, 1995.

The net income for the six months ended  September 28, 1996 was $66,124 or $0.04
per share as compared to a net income of $130,226 or $0.08 per share for the six
months ended September 30, 1995.



                                       6
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The working capital  deficiency  decreased  $196,845 for the first six months of
fiscal year 1996 to  $303,354.  Based upon the current  backlog and cash on hand
the Company  believes it has  sufficient  funds for the remainder of the current
year.  The  Company's  ability to  continue  is  dependent  upon its  ability to
generate sufficient cash flow from operations or to obtain additional financing.
Since  securing  financing  from  traditional  sources is difficult,  short term
liquidity must be provided by cash generated from operations. Management's plans
to improve  profitability  and cash flow are based on cost  reduction  measures,
continued  sales  efforts,  and  incremental  revenues  derived from new product
developments.

The Company's  liquidity and capital  position was improved by the redemption of
the outstanding  redeemable  preferred stock (the "Preferred  Stock").  In July,
1996 a group of the Company's  employees and  creditor's  agreed to purchase the
Preferred  Stock and dividends from the preferred  stockholder  for $111,700 and
exchanged the Preferred Stock for common stock.

The Company's  Board of Directors  approved the exchange of the Preferred  Stock
and dividends for 178,720 shares of newly issued common stock and stock purchase
warrants for an additional  35,744 shares of common stock. The purchase warrants
are  exercisable  at price per share of $0.75 until March 31, 1997,  $1.50 until
March 31, 1998, and $2.25, until March 31, 1999.

The Board of Directors also authorized the Company to offer all shareholders the
right to  purchase an  additional  178,720  shares of common  stock at $0.75 per
share and to issued, to such participating shareholders 35,744 in stock purchase
warrants with the same terms as those described above. This stock has been fully
subscribed and the stock certificates and warrants have been issued. The Company
received  $87,500 in cash and reduced its  liabilities by $46,540 as a result of
this transaction.

There was no  significant  impact  on the  Company's  operations  as a result of
inflation for the six months ended September 28, 1996.

These statements  should be read in conjunction with the Company's annual report
to the  Securities  and Exchange  Commission on Form 10-K for fiscal year ending
March 31, 1996



                                       7
<PAGE>

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  11 NOVEMBER 96                        s/s  Harold K. Fletcher
                                            ------------------------
                                            /s/  Harold K. Fletcher
                                                 Chairman and President




                                       8