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 September 30, 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:

2,035,181 shares of Common stock, $.10 par value as of November 6, 1997.

<PAGE>

                     TEL-INSTRUMENT ELECTRONICS CORPORATION

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

Item 1.    Financial Statements (Unaudited):

           Condensed Comparative Balance Sheets
              September 30, 1997 and March 31, 1997                          1

           Condensed Comparative Statements of Operations -
              Three and Six Months Ended September 30, 1997 and 1996         2

           Condensed Comparative Statements of Cash Flows -
              Six Months Ended September 30, 1997 and 1996                   3

           Notes to Condensed Financial Statements                           4

Item 2.    Management's Discussion and Analysis of the Results 
             of Operations and Financial Condition                          5-7


             SIGNATURES                                                      7

<PAGE>

Item 1 - Financial Statements

                     TEL-INSTRUMENT ELECTRONICS CORPORATION
                      CONDENSED COMPARATIVE BALANCE SHEETS

                      September 30, 1997 and March 31, 1997
                                   (Unaudited)

               ASSETS                          September 30,       March 31, 
                                                   1997               1997
                                              -------------       -----------
Current assets:                                                 
   Cash                                         $   347,974       $   528,636
   Accounts receivable, net of                                   
      allowance for doubtful                                        
      accounts of $58,821 at                                        
      September 30, 1997 and                                        
      $65,521 at March 31, 1997                     554,171           302,737
   Inventories                                      446,166           352,173
   Other current assets                              21,076             6,944
   Deferred income tax                                          
     benefit - current                               78,300            78,300
                                                -----------       -----------
                                                                
      Total current assets                        1,447,687         1,268,790
                                                                
Office and manufacturing                                        
  equipment, net                                     74,747            45,492
Other assets, net                                    86,884            71,884
Deferred income tax benefit                         168,436           261,900
                                                -----------       -----------
                                                                
      Total assets                                1,777,754         1,648,066
                                                ===========       ===========
                                                                
   LIABILITIES AND STOCKHOLDER'S EQUITY
                                                                
Current liabilities:                                            
   Accrued payroll, deferred                                    
     wages and vacation pay                         356,711           342,432
   Accounts payable and                                         
     accrued expenses                               458,655           485,380
                                                -----------       -----------
                                                                
      Total current liabilities                     815,366           827,812
                                                                
Convertible subordinated notes -                                
  related parties                                   365,000           365,000
                                                -----------       -----------
      Total liabilities                           1,180,366         1,192,812
                                                ===========       ===========
Stockholders' equity:                                           
   Common stock                                     203,521           203,097
   Additional paid-in capital                     3,902,216         3,901,052
   Accumulated deficit                           (3,508,349)       (3,648,895)
                                                -----------       -----------
                                                                
   Total stockholders' equity                       597,388           455,254
                                                -----------       -----------
   Total liabilities and                                        
     stockholders' equity                       $ 1,777,754       $ 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                     Six Months Ended

                                                     September 30,     September 30,       September 30,     September 30,
                                                         1997              1996                 1997             1996
                                                         ----              ----                 ----             ----

<S>                                                   <C>               <C>                  <C>               <C>      
Sales
   Government, net                                      567,191           353,335            1,124,705           784,374
   Commercial, net                                      276,850           248,266              590,159           450,834
                                                      ---------         ---------            ---------         ---------
Total sales                                             844,041           601,601            1,714,864         1,235,208
                                                                                       
Cost of sales                                           351,674           224,558              687,894           504,152
                                                      ---------         ---------            ---------         ---------
                                                                                       
Gross margin                                            492,367           377,043            1,026,970           731,056
                                                                                       
Operating expenses                                                                     
   Selling, general & administrative                    184,245           196,740              403,175           412,105
   Engineering, research & development                  205,981           109,078              363,926           220,329
                                                      ---------         ---------            ---------         ---------
                                                                                       
Total operating expenses                                390,226           305,818              767,101           632,434
                                                                                       
Income from operations                                  102,141            71,225              259,869            98,622
                                                                                       
Other income (expense):                                                                
   Interest income                                        5,651               384               11,733               609
   Interest expense                                     (19,849)          (16,221)             (37,592)          (33,107)
                                                      ---------         ---------            ---------         ---------
Income before taxes                                      87,943            55,388              234,010            66,124
                                                                                       
Provision for income taxes                               35,125              --                 93,464              --
                                                      ---------         ---------            ---------         ---------
Net income                                               52,818            55,388              140,546            66,124
                                                      =========         =========            =========         =========
                                                                                       
Income per common share                                    0.03              0.03                 0.07              0.04
Dividends per share                                        None              None                 None              None
Weighted average shares outstanding                   2,101,067         1,782,526            2,096,531         1,705,932

</TABLE>

See accompanying notes to condensed finanical statements


                                       2
<PAGE>

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

                                                           Six Months Ended
                                                             September 30,
                                                           1997          1996
                                                           ----          ----
Increase (decrease) in cash:
Cash flows from operating activities
Net income                                             $ 140,546      $  66,124
Adjustments to reconcile net income
   to cash provided by operating activities:
        Deferred income taxes                             93,464           --
        Depreciation                                      12,535         11,754

Changes in assets and liabilities:
   (Increase) decrease in accounts
      receivable, net                                   (251,434)       232,954
   (Increase) decrease in inventories                    (93,993)       (98,196)
   (Increase) decrease in other
      current assets                                     (14,132)         3,873
   (Increase) decrease in other assets                   (15,000)         1,127
   Increase (decrease) in accrued payroll,
      deferred wages and vacation pay                     14,279       (121,683)
   (Decrease) increase in accounts payable
      and accrued expenses                               (26,725)        16,607
                                                       ---------      ---------
Net cash (used in) provided by operations               (140,460)       112,560
                                                       ---------      ---------

Cash flows from investing activities:
   Cash purchases of property,
      plant and equipment                                (41,790)       (16,196)
                                                       ---------      ---------

Net cash used in investing activities                    (41,790)        16,196
                                                       ---------      ---------

Cash flows from financing activities:
Procees from exercise of stock options                     1,588           --
   Proceeds from issuance of common stock                   --           87,500
                                                       ---------      ---------
   Net cash provided by financing activities               1,588         87,500
                                                       ---------      ---------

Net (decrease) increase in cash                         (180,662)       183,864
Cash at beginning of period                              528,636         22,625
                                                       ---------      ---------

Cash at end of period                                  $ 347,974      $ 206,489
                                                       =========      =========

Non-Cash Items:
   Preferred stock redeemed and exchanged
      for common stock                                      --        $ 606,643
   Stock issued to related party
      for liabilities                                       --        $  46,540

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 September 30, 1997,  the results of operations  for the
three and six months  ended  September  30, 1997 and  September  30,  1996,  and
statements  of cash  flows  for the six  months  ended  September  30,  1997 and
September 30, 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:

                                              September 30,      March 31,
                                                  1997             1997
                                              ----------------------------
         Purchased parts                       $ 271,562        $ 213,842
         Work-in-process                         242,909          206,750
         Less: Reserve for obsolescence          (68,305)         (68,419)
                                              ----------------------------
                                               $ 446,166        $ 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.

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 six months ended  September  30, 1997,  the Company
recorded a provision for income taxes of $93,464, which represents the effective
federal and state tax rate on the Company's net income before taxes of $234,010.
The  Company  has no tax  liability.  The  $93,464  tax  provision  reduced  the
Company's  deferred  income tax by the same amount at September  30, 1997.  This
amount  represents a portion of the net operating  loss 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 THE
         RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Results of Operations

The  Company  continues  to  increase  sales and income  from  operations  while
increasing  its  research  and  development  expenditures.  This  investment  in
research and development is necessary to sustain the growth and profitability of
the Company by producing innovative, state-of-the-art products.

Sales

Sales  increased  $242,440  (40.3%) and  $479,656  (38.8%) for the three and six
months ended September 30, 1997,  respectively,  as compared to the same periods
last  year.  The sales  increases  were both in the  government  and  commercial
markets.  Government  sales  increased  $213,856  (60.5%) and  $340,331  (43.4%)
related to a contract with the USAF.  Commercial sales increased $28,584 (11.5%)
and  $139,325  (30.1%) for the three and six months  ended  September  30, 1997,
respectively,  as compared to the three and six months ended September 30, 1996.
The Company  continues to focus its efforts in the government  market,  has been
very active in responding to requests from the U.S.  Government for  quotations,
and has been adapting its product designs to respond to these requests.

During the first quarter of this year, the Company  identified certain technical
issues with one of its  products  scheduled  to be  delivered  during the second
quarter of Fiscal 1998. The Company  corrected such technical issues and most of
the units will be shipped  during the third  quarter.  As such,  second  quarter
results were  adversely  affected but, the Company  expects that such  shipments
will have a positive affect on the third quarter.

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 associated  documentation.  This
work, to be completed  within the next 12 months,  represents a major  milestone
for the Company  since this  contract  could be a  significant  source of future
revenues. The 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.  During September 1997, the U.S. Navy conducted a Program
Design Review (PDR) for this contract and the Company  believes that such review
was favorable.

The  Company  continues  to explore  expanding  into  other  markets in order to
capitalize on its technology.

Gross Margin

Gross margin  increased  $115,324 (30.6%) and $295,914 (40.5%) for the three and
six months  ended  September  30,  1997,  respectively,  as compared to the same
periods in the prior fiscal  year.  Gross margin as a percent of sales was 58.3%
and 59.9% for the three and six months ended  September 30, 1997,  respectively,
as compared to 62.7% and 59.2% for the three and six months ended  September 30,
1996, respectively. For the six months ended September 30, 1997, the increase in
gross margin primarily reflects the higher volume.  However,  the second quarter
gross margin increase  attributed to volume was partially offset by lower prices
on certain  government  sales, as a result of the higher quantity  ordered,  and
lower gross profit on milestone billings on the contract for the U.S. Navy.


                                       5
<PAGE>

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

Operating Expenses

Selling, general and administrative expenses decreased $12,495 (6.4%) and $8,390
(2.2%) for the three and six months ended  September 30, 1997,  respectively  as
compared to the same periods last year. Lower selling  expenses,  administrative
salaries  and  legal  costs  were  partially  offset  by  increased  commissions
associated with the higher government sales and expenses incurred related to the
Company's  efforts to explore  additional  markets.  Engineering,  research  and
development expenses increased $96,903 (88.8%), for the same period and $143,597
(65.2%) reflecting the Company's commitment and efforts to develop new products.

Interest

Interest income increased as a result of the higher cash balances.

Income Before Taxes

Income  before  taxes  increased  $32,555 to $87,943 for the three  months ended
September 30, 1997, and $167,886 to $234,010 for the six months ended  September
30, 1997 as compared to the same periods 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 six months ended September 30, 1997, the Company has recorded a
provision for income taxes utilizing the estimated  effective  Federal and State
income tax rates for fiscal 1998. The Company has no tax liability.  The Company
will   continue  to  monitor  the  amount  of  deferred  (net   operating   loss
carryforward) which can be recovered through future taxable income.

Net Income

Net income for the three  months ended  September  30, 1997 was $52,818 or $0.03
per share,  as  compared  to $55,388 or $0.03 per share in for the three  months
ended September 30, 1997. Net income for the six months ended September 30, 1997
was $140,546 or $0.07 per share as compared to $66,124 or $0.04 per share in for
the six months ended  September  30,  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  in the six  months  ending
September  30, 1997 was reduced by a $93,464 tax  provision  as described in the
preceding paragraph.  The net for the comparable fiscal year 1996 period was not
reduced.

Liquidity and Capital Resources

At September  30, 1997 the Company had positive  working  capital of $632,321 as
compared  to  $440,978  at March 31,  1997.  The  Company's  liquidity  position
continues to improve.  The Company's net worth improved to $597,388 at September
30, 1997,  as compared to $455,254 at March 31,  1997.  For the six months ended
September  30, 1997,  cash used in  operations  was $140,460 as compared to cash
provided


                                       6
<PAGE>

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

Liquidity and Capital Resources (continued)

by  operations  of $112,560 for the six months  ended  September  30, 1996.  The
decrease in cash  provided by operations is primarily a result of an increase in
accounts  receivable  for items  shipped  late in the  quarter,  an  increase in
inventories  associated  with  orders to be shipped in the  current  fiscal year
partially  offset by the Company's net income,  including such non-cash items as
depreciation and deferred income taxes.

The Company continues 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
twelve  months.  At present,  the Company  does not expect to incur  significant
long-term needs for capital outside of its normal operating activities.

The Company has preliminary  approval 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
fiscal year ended March 31, 1997.

Recent Pronouncements

In June 1997 the  Financial  Accounting  Standards  Board  issued  SFAS No. 130,
"Reporting  Comprehensive  Income." SFAS No. 130  establishes  the standards for
reporting and  displaying  comprehensive  income and its  components  (revenues,
expenses, gains, and losses) as part of a full set of financial statements. This
statement  requires that all elements of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  The  statement is effective  for fiscal years  beginning
after December 15, 1997. For the Company,  the standard becomes  effective April
1, 1998.  Since this standard  applies only to the presentation of comprehensive
income,  it will not have any impact on the  Company's  results  of  operations,
financial position, or cash flows.

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: 10 November 1997                 By: /s/ Harold K. Fletcher
                                          ------------------------------
                                          /s/ Harold K. Fletcher
                                          Chairman and President