SECURITIES AND EXCHANGE COMMISSION

 
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-Q

        _x_    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
               OF THESECURITIES EXCHANGE ACT OF 1934

               For  the quarterly period ended December 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 January 31, 1997.

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

Financial Statements (Unaudited)

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

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

Condensed Comparative Statements of Cash Flows -
Nine Months Ended December 28, 1996 and December 30, 1995                    3-4

Notes to Condensed Financial Statements                                      5-6

Management's Discussion and Analysis of Financial Condition
And Results of Operations                                                    7-9

Other SEC Reporting Requirements                                             10

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                      CONDENSED COMPARATIVE BALANCE SHEETS

                                   (Unaudited)

                                                   December 28,      March 31,
                                                           1996           1996
                                                  -------------   -------------
ASSETS                                                                
Current assets:                                                       
  Cash                                            $     253,314  $       22,625
  Accounts receivable, net                              253,943         359,494
  Inventories                                           342,407         346,874
  Other current assets                                   13,483           7,135
                                                  -------------   -------------
                                                                      
        Total current assets                            863,147         736,128
                                                                      
Office and manufacturing equipment, net                  55,326          41,825
Other assets, net                                        45,529          46,653
                                                  -------------   -------------
                                                                      
        Total assets                                    964,002         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                                       426,455         590,353
   Accounts payable and accrued expenses                512,337         580,974
                                                  -------------   -------------

        Total current liabilities                     1,003,792       1,236,327

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

        Total liabilities                             1,103,792       1,942,970
                                                  -------------   -------------

Stockholders' deficiency
   Common stock                                         196,127         160,383
   Additional paid-in capital                         3,856,371       3,151,432
   Accumulated deficit                               (4,192,288)     (4,430,179)
   Total stockholders deficiency                       (139,790)     (1,118,364)
                                                  -------------   -------------

   Total liabilities and 
     stockholders' deficiency                     $     964,002   $     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            Nine Months Ended
                                  December 28,  December 30,  December 28,   December 30,
                                     1996          1995         1996            1995
Sales:
<S>                             <C>           <C>            <C>            <C>         
   Government, net              $    672,740  $    216,700   $ 1,457,114    $    818,441
   Commercial, net                   267,996       290,765       718,830         909,540
                                ------------  ------------   -----------    ------------
Total sales                          940,736       507,465     2,175,944       1,727,981

Cost of sales                        414,320       190,690        918,472        690,598
                                ------------  ------------   ------------   ------------

Gross margin                         526,416       316,775      1,257,472      1,037,383
                                ------------  ------------   ------------   ------------

Operating expenses
   Selling, general and              221,904       188,755        634,009        564,553
     administrative
   Engineering, research and         117,734       107,909        338,063        287,202
     development
                                ------------  ------------   ------------   ------------

Total operating expenses             339,638       296,664        972,072        851,755
                                ------------  ------------   ------------   ------------

   Profit from operations            186,778        20,111        285,400        185,628

Other income (expenses):
   Interest income                         6           329            615            512
   Interest expense                  (15,017)      (17,558)       (48,124)       (53,032)
                                ------------  ------------   ------------   ------------
        Net profit              $    171,767  $      2,882   $    237,891   $    133,108
                                ============  ============   ============   ============

Earnings per share-primary      $       0.08  $       0.00 $         0.13           0.08
Primary shares                     2,049,629     1,603,606      1,803,769      1,603,806
Earnings per share-full         $       0.08  $       0.00 $         0.13   $       0.08
   diluted
Fully diluted shares               2,049,629     1,603,606      1,866,785      1,603,806
Dividends declared per share         none          none            none           none
</TABLE>


See accompanying notes to condensed financial statements


                                       2
<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                 CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS

                                   (Unaudited)


                                                        Nine Months Ended

                                                  December 28,    December 30,
                                                          1996            1995
                                                  ------------    ------------

Increase (decrease) in cash:
Cash flows from operating activities:
  Cash received from customers                    $ 2,290,911      $ 1,748,678
  Cash paid to vendors and employees               (2,053,226)      (1,684,567)
  Interest received                                       615              512
  Interest paid                                       (61,173)         (10,313)
                                                  -----------      -----------

   Net cash provided by 
     operating activities                             177,127           54,310
                                                  -----------      -----------

Cash flows from investing activities:
   Cash purchases of property, 
     plant and equipment                              (33,938)         (10,203)
                                                  -----------      -----------

   Net cash used in investing activities              (33,938)         (10,203)
                                                  -----------      -----------

Cash flows from financing activities:
   Repayment of debt                                     --            (16,667)
   Proceeds from issuance of common stock              87,500             --
                                                  -----------      -----------
   Net cash provided by (used in) 
     financing activities                              87,500          (16,667)
                                                  -----------      -----------

Net Increase in cash                                  230,689           27,440
Cash at beginning of period                            22,625           38,768
                                                  -----------      -----------
Cash at end of period                             $   253,314      $    66,208
                                                  ===========      ===========

Supplemental Schedule of non 
cash financing items:
   Preferred stock redeemed & 
     exchanged for common stock                       606,643             --
   Stocks issued to related party 
     for liabilities due                               46,540             --
   Redeemable Preferred Stock 
     Dividends Accrued                                   --             22,500



See accompanying notes to condensed financial statements.


                                       3
<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

            CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS, Continued

                                   (Unaudited)


                                                           Nine Months Ended

                                                    December 28,    December 30,
                                                            1996            1995
                                                    ------------    ------------
                                                                   
Net profit                                           $ 237,891       $  133,108
    Adjustments                                                    
        Depreciation                                    18,344           12,899
        Disposal of Sales Equipment                      2,093             --
                                                                   
                                                                   
                                                                   
Changes in assets and liabilities:                                 
   Decrease (increase) in accounts receivable          105,551           20,697
   Decrease in inventories                               4,467           26,681
   Decrease (increase) in other current assets          (6,348)             639
   Decrease (increase) in other assets                   1,124           (1,126)
   Decrease in accounts payable                                    
     and accrued expenses                              (68,637)        (152,189)
   (Decrease) increase in accrued                                  
     payroll, deferred wages and                                   
     vacation pay                                     (117,358)          13,601
                                                     ---------        ---------
                                                                   
Net cash provided by operating activities            $ 177,127        $  54,310
                                                     =========        =========
                                                                   
See accompanying notes to condensed financial statements.       


                                       4
<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 December 28, 1996,  the results of  operations  for the
three  and nine  months  ended  December  28,  1996 and  December  30,  1995 and
statements  of cash  flows  for the nine  months  ended  December  28,  1996 and
December 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  fiscal  year 1996  financial
statements to conform with the fiscal year 1997 presentation.

Note 3

Primary and fully diluted  earnings per share are based on the weighted  average
number of common shares and common share equivalents  outstanding.  Common share
equivalents include stock options and warrants using the treasury stock method.

Note 4

In July,  1996 a group of the Company's  employees  and creditors  purchased the
preferred  stock and dividends and exchanged  such stock for common stock of the
Company.  The Preferred Stock and dividends were exchanged for 178,720 shares of
newly issued  common stock and stock  purchase  warrants for  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.


                                       5
<PAGE>

Note 5

In  September  the  Company  offered all  shareholders  the right to purchase an
additional 178,720 shares of common stock at $0.75 per share and 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
for 116,667  shares and satisfied its  liabilities  of $46,540 for 62,053 shares
that were issued to the Company  President.  These shares and warrants were sold
pursuant to an exemption  from  registration  under the  Securities  Act of 1933
pursuant to section 4, paragraph (2) as a transaction by an issuer not involving
any public  offering.  The shares were sold to a limited number of knowledgeable
and   sophisticated   employees,   creditors  and  shareholders  and  the  stock
certificates bear a legend restricting transfer.


                                       6
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION

RESULTS OF OPERATION

Sales

Net sales increased $433,271 (85.4%) and $447,963 (25.9%) for the three and nine
months ended December 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 some 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 $2,304,896.  Shipments against this contract
began in the first  quarter of fiscal  year 1996 and will  continue  through the
third quarter of the next fiscal year. Both commercial and government sales were
held down in the second quarter because of missed  shipments of key parts by one
vendor whose  problems have since been  remedied.  These missed  shipments  were
shipped in this quarter causing better than expected sales for this 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  $209,641 (66.2%) and $220,089 (21.2%) for the three and
nine  months  ended  December  28,  1996,  respectively,   as  compared  to  the
corresponding  periods in the prior fiscal year.  This increase is attributed to
the higher  volume.  The gross margin  percentage  was 57.8% for the nine months
ended  December  28, 1996 as compared to 60% for the same period last year.  The
lower  percentage  gross  margin is  attributed  to shipment of the lower margin
products for the Air Force contract.


                                       7
<PAGE>

Operating Expenses

Total selling, general and administrative expenses increased $33,149 (17.6%) and
$69,456   (12.3%)for  the  three  and  nine  months  ended  December  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 and accrued employee  incentive  compensation.
Engineering,  research and development  expenditures increased $9,825 (9.1%) for
the three month period ending  December 28, 1996, and increased  $50,861 (17.7%)
for the nine month period ending December 28, 1996, due to increased new product
development efforts and accrued employee incentive compensation.

The net income for the three months ended December 28, 1996 was $171,767 or $.08
per share as compared to a net income of $2,882 or $0.00 per share for the three
months ended December 30, 1995.


The net income for the nine months ended December 28, 1996 was $237,891 or $0.13
per share as  compared  to a net income of  $133,108  or $0.08 per share for the
nine months ended December 30, 1995.

Liquidity And Capital Resources

At December 31, 1996 the Company's working capital deficiency decreased $359,554
to $140,645 from March 31, 1996. Net cash provided by operating  activities also
improved for the nine months ended  December 28, 1996 to $177,127 as compared to
$25,039 for the same period last year..

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

The Preferred  Stock and dividends  were  exchanged for 178,720  shares of newly
issued common stock and stock purchase  warrants for 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.


                                       8
<PAGE>

In  September  the  Company  offered  all  shareholders  the  right to  purchase
additional 178,720 shares of common stock at $0.75 per share and 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
for 116,667  shares and satisfied its  liabilities  of $46,540 for 62,053 shares
that were issued to the Company  President.  These shares and warrants were sold
pursuant to an exemption  from  registration  under the  Securities  Act of 1933
pursuant to Section 4 Paragraph (2) as a transaction  by an issuer not involving
any public  offering.  The shares were sold to a limited number of knowledgeable
and   sophisticated   employees,   creditors  and  shareholders  and  the  stock
certificates bear a legend restricting transfer.

The  Company  continues  to  explore  additional  opportunities  to find ways 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 over the next twelve months.

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 three month period ended December 31, 1996, the high and low
bids were $1.31 and $.75,  respectively.  These quotations reflect  inter-dealer
prices,  without retail markup or commission and may not  necessarily  represent
actual transactions.

Inflation  did not  have a  material  impact  on the  results  of the  Company's
operations for the nine months ended December 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.


                                       9
<PAGE>

Other SEC Reporting Requirements

Submission of Matters to a Vote of Security Holders

(a) The  Annual  Meeting  of  Shareholders  was held on  September  5, 1996 (the
"Annual Meeting").

(b) Not  applicable  because (i) proxies for the Annual  Meeting were  solicited
pursuant to Regulation 14A under the Securities 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                1,155,096              0
         Robert J. Walker                  1,155,096              0
         George F. Leon                    1,155,096              0

The shareholders also voted all 1,155,096 shares in favor of Coopers and Lybrand
as the  Corporation's  certified  public  accountants for the fiscal year ending
March 31, 1997.

The  shareholders  also  voted  all  1,155,096  shares  for the  redemption  and
cancellation  of the Redeemable  Preferred Stock and all accrued  dividends,  in
exchange  for 178,720  shares of common  stock and  warrants to purchase  35,744
shares of common stock.

The  shareholders  also voted all  1,155,096  shares in favor of the  directors'
action to  authorize  the offer and sale to  shareholders  of 178,720  shares of
common stock and warrants to purchase 35,744 shares of common stock.

The  shareholders   voted  all  1,155,096  share  to  amend  the   Corporation's
Certificate  of  Incorporation  to  increase  the  authorized  common  shares to
4,000,000 and preferred shares to 1,000,000.

(d) Not applicable.

Exhibits and Reports on Form 8-K

(a) The Company has not filed any exhibits as part of this  Quarterly  Report on
Form 10-Q.

(b) During the quarter  ended  December 31,  1995,  the Company did not file any
current Reports on Form 8-K.

                                       10
<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 February 21, 1997              /s/ Harold K. Fletcher
                                    ------------------------------
                                        Harold K. Fletcher
                                        Chairman and President