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 June 30, 2001

      ___   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:

2,127,951 shares of Common stock, $.10 par value as of August 9, 2001.


<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

Item 1.  Financial Statements (Unaudited):

         Condensed Comparative Balance Sheets
         June 30, 2001 and March 31, 2001                                    1

         Condensed Comparative Statements of Operations -
         Three Months Ended June 30, 2001 and 2000                           2

         Condensed Comparative Statements of Cash Flows -
         Three Months Ended June 30, 2001 and 2000                           3

         Notes to Condensed Financial Statements                           4-5

Item 2.  Management's Discussion and Analysis of the Results of
         Operations and Financial Conditions                               6-8

         SIGNATURES                                                          8


<PAGE>

Item 1 - Financial Statements

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
                      CONDENSED COMPARATIVE BALANCE SHEETS
                        June 30, 2001 and March 31, 2001

<TABLE>
<CAPTION>
                                                                      (Unaudited)        (Audited)
ASSETS                                                               June 30, 2001     March 31, 2001
                                                                     -------------     --------------
<S>                                                                   <C>               <C>
Current assets:
   Cash                                                               $   441,531       $   433,438
  Accounts receivable, net of allowance for doubtful
      accounts of $11,598 at June 30, 2001 and
      March 31, 2001                                                    1,296,945         1,264,383
  Inventories                                                           2,474,021         2,351,648
  Prepaid expenses and other current assets                                76,942            43,568
  Deferred income tax benefit - current                                   527,276           527,276
                                                                      -----------       -----------
Total current assets                                                    4,816,715         4,620,313
Property, plant and equipment, net                                        787,640           674,656
Other assets                                                               41,804            35,354
Deferred income tax benefit                                               482,110           604,323
                                                                      -----------       -----------
Total assets                                                            6,128,269         5,934,646
                                                                      ===========       ===========

LIABILITIES & STOCKHOLDERS EQUITY

Current liabilities:
  Note payable - related party - current portion                          200,000           200,000
  Note payable - bank                                                     250,000           250,000
  Convertible subordinated notes - related party                           15,000            15,000
  Capitalized lease obligations - current portion                         100,392            77,826
  Deferred revenues                                                       257,952           267,630
  Accrued payroll, vacation pay, deferred wages
      payroll taxes and interest on deferred wages                        554,016           535,850
  Accounts payable and accrued expenses                                 1,405,985         1,507,647
                                                                      -----------       -----------
Total current liabilities                                               2,783,345         2,853,953

Notes payable - related party - non-current portion                       150,000           150,000
Capitalized lease obligations - excluding current port                     81,284            68,345
                                                                      -----------       -----------
Total liabilities                                                       3,014,629         3,072,298

Stockholders' equity:
   Common stock                                                           212,798           212,438
   Additional paid-in capital                                           3,934,343         3,932,111
   Accumulated deficit                                                 (1,033,501)       (1,282,201)
                                                                      -----------       -----------
Total stockholders' equity                                              3,113,640         2,862,348
                                                                      -----------       -----------

Total liabilities and stockholders' equity                            $ 6,128,269       $ 5,934,346
                                                                      ===========       ===========
</TABLE>

See accompanying notes to condensed financial statements


                                       1
<PAGE>

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

                                                         Three Months ended
                                                         ------------------
                                                    June 30, 2001  June 30, 2000
                                                    -------------  -------------

Sales - government, net                              $ 1,808,671    $   917,113
Sales - commercial, net                                  753,018        572,890
                                                     -----------    -----------
Total sales                                            2,561,689      1,490,003

Cost of sales                                          1,314,306        786,709
                                                     -----------    -----------

Gross margin                                           1,247,383        703,294

Operating expenses:
  Selling, general and administrative                    398,612        353,443
  Engineering, research and development                  415,171        181,998
                                                     -----------    -----------
Total operating expenses                                 813,783        535,441
                                                     -----------    -----------

Income from operations                                   433,600        167,853

Other income (expenses):
  Interest income                                          4,592          3,454
  Interest expense                                       (18,612)       (30,613)
                                                     -----------    -----------
Income before taxes                                      419,580        140,694

Provision for income taxes                               170,880         56,207
                                                     -----------    -----------

Net income                                               248,700         84,487
                                                     ===========    ===========

Basic and diluted income per common share            $      0.12    $      0.04
                                                     ===========    ===========

Dividends per share                                         None           None

Weighted average shares outstanding
   Basic                                               2,125,251      2,113,390
   Diluted                                             2,162,197      2,146,183

See accompanying notes to condensed financial statements


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                              Three Months ended
                                                                              ------------------
                                                                        June 30, 2001    June 30, 2000
                                                                        -------------    -------------
<S>                                                                       <C>              <C>
Increase (decrease) in cash:
Cash flows from operating activities
Net income                                                                $ 248,700        $  84,487
Adjustments to reconcile net income to
    cash used in operating activities:
       Deferred income taxes                                                122,213           56,207
       Depreciation                                                          45,507           23,045

Changes in assets and liabilities:
    Increase in accounts receivable                                         (32,562)        (255,506)
    Increase in inventories                                                (122,373)          (4,060)
   (Increase) decrease in prepaid exp. & other current assets               (33,374)           8,170
    Increase in other assets                                                 (6,450)          (6,150)
    Increase in accrued payroll, deferred wages
      and vacation pay                                                       18,166          113,372
    Decrease in accounts payable, deferred
      revenues and accrued expenses                                        (111,340)         (56,788)
                                                                          ---------        ---------
Net cash provided by (used in) operations provided by                       128,487          (37,223)
                                                                          ---------        ---------

Cash flows from investing activities:
    Cash purchases of property, plant and equipment                         (96,634)            (886)
                                                                          ---------        ---------
Net cash used in investing activities                                       (96,634)            (886)
                                                                          ---------        ---------

Cash flows from financing activities:
    Proceeds from the exercise of stock options                               2,592              664
    Repayment of capitalized lease obligations                              (26,352)         (14,771)
                                                                          ---------        ---------
Net cash used in financing activities                                       (23,760)         (14,107)
                                                                          ---------        ---------

Net increase (decrease) in cash                                               8,093          (52,216)
Cash at beginning of period                                                 433,438          172,836
                                                                          ---------        ---------
Cash at end of period                                                     $ 441,531        $ 120,620
                                                                          =========        =========

Taxes paid                                                                $  89,305               --
Interest paid                                                             $  30,811        $  16,751
Assets acquired through capital leases                                    $  61,857               --
</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 June 30, 2001 the results of  operations  for the three
months ended June 30, 2001 and June 30, 2000,  and  statements of cash flows for
the three months ended June 30, 2001 and June 30,  2000.  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, 2001 results included herein have been
derived from the audited financial  statements  included in the Company's annual
report on Form 10-K.  Accordingly,  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, 2001.

Note 2 Accounts Receivable

The following table sets forth the components of accounts receivable:

                                           June 30, 2001     March 31, 2001
                                           -------------     --------------

      Commercial                            $   534,340       $   392,214
      Government                                774,203           883,767
      Allowance for bad debts                   (11,598)          (11,598)
                                            -----------       -----------

      Total                                 $ 1,296,945       $ 1,264,383
                                            ===========       ===========

Note 3 Inventories

Inventories consist of:

                                           June 30, 2001     March 31, 2001
                                           -------------     --------------

      Purchased parts                       $ 1,281,445       $ 1,072,191
      Work-in-process                         1,265,371         1,352,252
      Less: Reserve for obsolescence            (72,795)          (72,795)
                                            -----------       -----------
                                            $ 2,474,021       $ 2,351,648
                                            ===========       ===========


                                       4
<PAGE>

                        TEL-INSTRUMENT ELECTRONICS CORP.

               NOTES TO CONDENSED FINANCIAL STATEMENTS (continued)

Note 4 Income Taxes

The Company,  in accordance  with FASB 109, has recognized a deferred income tax
benefit based upon the expected  utilization of net operating loss carryforwards
before  they  expire  and  benefit  from the  reversal  of tax  asset  temporary
difference. For the three months ended June 30, 2001, the Company recorded a tax
provision of $170,880, which represents the effective federal and state tax rate
on the Company's  net income before taxes of $419,580.  The Company does not pay
significant federal taxes as a result of its net operating loss carryforwards.

Note 5 Earnings Per Share

The  Company's  basic  income per share is based on net income for the  relevant
period,  divided by the weighted  average  number of common  shares  outstanding
during the period.  Diluted income per share is based on net income,  divided by
the weighted  average  number of common  shares  outstanding  during the period,
including common share equivalents, such as outstanding stock options

Note 6 Government and Commercial Sales

In 1999, the Company adopted SFAS 131.  Presented below is information about the
Company's government and commercial activities.

The Company is organized  primarily on the basis of its avionics  products.  The
government  market consists  primarily of the sale of test equipment to U.S. and
foreign  governments and militaries either direct or through  distributors.  The
commercial  market  consists of sales of test  equipment to domestic and foreign
airlines and to  commercial  distributors.  The Company  primarily  develops and
designs test  equipment for the avionics  industry  and, as such,  the Company's
products and designs may be sold in the government and commercial markets.

The table below presents information about sales and gross margin. Cost of sales
includes certain allocation factors for indirect costs.

                            Three Months Ended          Three Months Ended
                              June 30, 2001               June 30, 2000
                         Government   Commercial      Government   Commercial
                         ----------   ----------      ----------   ----------

      Sales              $1,808,671      753,018      $  917,113      572,890
      Cost of sales         965,303      349,003         496,744      289,965
                         ----------   ----------      ----------   ----------
      Gross margin       $  843,368      404,015      $  420,369      282,925
                         ==========   ==========      ==========   ==========


                                       5
<PAGE>

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

Results of Operations

A number of the statements made by the Company in this report may be regarded as
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995.

Forward-looking  statements  include,  among others,  statements  concerning the
Company's outlook, pricing trends and forces within the industry, the completion
dates of capital projects,  expected sales growth, cost reduction strategies and
their  results,   long-term  goals  of  the  Company  and  other  statements  of
expectations, beliefs, future plans and strategies, anticipated events or trends
and similar expressions concerning matters that are not historical facts.

All  predictions  as to future  results  contain a measure  of  uncertainty  and
accordingly,  actual  results  could differ  materially.  Among the factors that
could cause a difference are: changes in the general economy;  changes in demand
for the Company's products or in the cost and availability of its raw materials;
the  actions of its  competitors;  the success of our  customers;  technological
change;  changes in  employee  relations;  government  regulations;  litigation,
including  its  inherent  uncertainty;  difficulties  in  plant  operations  and
materials;   transportation,   environmental   matters;   and  other  unforeseen
circumstances.  A number of these factors are discussed in the Company's filings
with the Securities and Exchange Commission.

Overview

For the quarter ended in June 2001,  sales increased 71.9% to $2,561,689 and net
income before taxes increased  198.2% to $419,580.  Deliveries of the AN/APM 480
IFF ((Identification, Friend or Foe) Transponder Set Test Set (TSTS) to the U.S.
Navy continue and accounted for 41.8% of sales for the quarter.

The Company's backlog at June 30, 2001,  including the production order from the
U.S. Navy, exceeds $12,000,000. The company expects to ship the backlog over the
next few fiscal years

The Company  continues to actively pursue  opportunities  in both the commercial
and government markets,  both domestically and internationally,  and new product
development efforts based upon evaluation of these markets. The Company has been
active in responding to customer requests for quotation, in addition to adapting
its product designs to respond to these requests.  Exploration of  opportunities
in other  government  and  commercial  markets  also  continues in an attempt to
broaden the Company's product line.


                                       6
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
        RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Results of Operations (continued)

Sales

For the three months ended June 30, 2001, net sales increased $1,071,686 (71.9%)
as compared to the three months ended June 30, 2000.

Government  sales  increased  $891,558  (97.2%) to  $1,808,671  as  compared  to
$917,113 for the first three  months of the prior  fiscal year.  The increase in
government  sales is mainly  attributed to the shipment of the AN/APM 480 to the
U.S. Navy (41.8% of total sales).

Commercial sales increased  $180,128 (31.4%) to $753,018 as compared to $572,890
for the three  months  ended June 30,  2000.  The increase in sales is primarily
attributed to the shipment of commercial  test sets to a major freight  carrier.
Recently,  the  Company  has seen a  softening  within  the  commercial  airline
industry which could affect sales from this market in the future.

Gross Margin

Gross margin dollars increased  $544,089 (77.4%) for the three months ended June
30, 2001 as  compared to the same three  months in the prior  fiscal  year.  The
increase in gross  margin,  for the most part,  is  attributed to an increase in
sales volume.  The gross margin  percentage  for the three months ended June 30,
2001 was 48.7% as compared to 47.2% for the three months ended June 30, 2000.

Operating Expenses

Selling,  general and administrative  expenses increased $45,169 (12.8%) for the
three months ended June 30, 2001, as compared to the three months ended June 30,
2000.  This  increase  is  attributed  to an  increase  in sales  and  marketing
activities,  accrued  compensation  expense,  and an increase in facility  costs
associated with the Company adding the lower level of the building to its lease.
This increase was partially offset by a decrease in commission expenses.

Engineering,  research and development expenses increased $233,173 (128.1%). The
higher  level of  expenditures  is  associated  with an increase in research and
development   activities,   including  the   finalization   of  a  design  of  a
multi-function  test set, a  commercial  bench test,  and new products for other
targeted markets.  The Company has also begun work on the next generation of IFF
(Identification, Friend or Foe) test sets.

Income Taxes

In accordance  with SFAS 109, a provision for income taxes was recognized in the
amount of $170,880 for the three months  ended June 30, 2001,  which  represents
the effective federal and state tax rate on the company's income before taxes of
$419,580.  (See Note 4 to Notes to Condensed comparative Financial  Statements.)
The  Company  does not pay  significant  federal  taxes  as a result  of its net
operating loss carryforwards.


                                       7
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
        RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Liquidity and Capital Resources

At June 30, 2001 the Company  had  positive  working  capital of  $2,033,370  as
compared to  $1,766,360  at March 31, 2001.  For the three months ended June 30,
2001,  cash  provided  by  operations  was  $128,487 as compared to cash used in
operations of $37,223 for the three months ended June 30, 2001. This increase in
cash from operations is primarily attributed to the improvement in the Company's
operating income, partially offset by an increase in inventories and a reduction
in accounts payable and accrued expenses.

The Company has a line of credit in the amount of $600,000 from Fleet Bank.  The
line of credit bears an interest rate of 1% above the lender's  prevailing  base
rate, which is payable monthly,  based upon the outstanding balance. At June 30,
2001, the company had borrowed $250,000 against its line of credit.  The line of
credit is  collateralized  by substantially all of the assets of the company and
expires on August 30,  2001.  The Company is currently  renegotiating  this line
with the bank.  The credit  facility  requires  the Company to maintain  certain
financial covenants. As of June 30, 2001, the Company was in compliance with all
financial covenants.

Based upon the current backlog,  its existing credit line, and cash balance, the
Company  believes that it has sufficient  working  capital to fund its operating
plans for the next twelve  months.  At present,  the Company does not anticipate
significant long-term needs for capital outside its normal operating activities

There was no  significant  impact  on the  Company's  operations  as a result of
inflation for the three months ended June 30, 2001.

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
fiscal year ended June 30, 2001.

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:    August 9 2001                          By: /s/ Harold K. Fletcher
                                                    --------------------------
                                                        Harold K. Fletcher
                                                        Chairman and President

Date:   August 9, 2001                          By: /s/ Joseph P. Macaluso
                                                    --------------------------
                                                        Joseph P. Macaluso


                                       8