SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Fiscal Year ended
September 30, 1998              	Commission File No. 1-11020
MICEL CORP.

(Exact name of registrant as specified in its charter)

NEW YORK	11-2882297                    
(State or other jurisdiction of	 (I.R.S. Employer Identification No.)
incorporation or organization) 	

                                 445 Central Avenue, Cedarhurst, NY  11516
                                 (Address of principal executive offices) 
                                 (Zip Code)

                              			Registrant's telephone number,
                             				including area code:   (516) 569-0606

                   Securities registered pursuant to Section 12(b) of the Act:

                                           									Name of each exchange
Title of each class							                          on which registered   
      None								                                          None

       Securities registered pursuant to Section 12(g) of the Act:

                         Title of Each Class
                     Common Stock, $.01 par value
                           
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 by check mark if disclosure of delinquent filers pursuant to Item 405 
of Regulation SB (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

Registrant's revenues for fiscal year ended September 30, 1998 was $2,740,476.

The aggregate market value of voting stock held by non-affiliates of the 
registrant is $9,449,692 as of December 31, 1998.

The number of shares outstanding of the registrant's Common Stock as of December
31, 1998 is: 

		Class					                            Outstanding at December 31, 1998
	Common Stock, $.01 par value				                    6.100.380



Part 1

Item 1.  Business
  The Company, through its various subsidiaries, is engaged in the development, 
manufacture and sale of radio frequency (RF) microwave components and custom 
made integrated assemblies for commercial and military applications.  These 
wireless applications include radio communications, electronic warfare (EW) and 
radar.
 
Other applications that the Company are developing are microwave products for 
the commercial telecommunications field, such as radios for rural 
telecommunications and point to point communications.  The Company possesses the
product and technology base necessary for the production of certain microwave 
components and complete subsystems. 

The Company's corporate strategy has been to create a series of separate 
operating divisions or partially owned subsidiaries to support the manufacture, 
marketing/sales, and distribution of specific commercial technologies.

RadioTel, Ltd., located in Israel, was established to develop managed wireless 
SDH (Synchronous Digital Hierarchy) transmission networks.  Through the use of 
novel techniques and state of the art technologies, the Company hopes to extend 
wideband wireline/fiber services into the wireless domain. These wireless 
networks are used to extend the existing and future infrastructure while at the 
same time supplying full transparency of all protocols (i.e.)  ATM (Asynchronous
Transfer Mode), IP (Internet Protocol), and SDH) with the same reliability and 
uninterrupted service of wireline services. 

On March 31,1998, RadioTel supplied an ISDN (Integrated Service Digital Network)
Multi-Link, for technology evaluation, to MadenTech Consulting Engineering Inc. 
Upon the completion of the project, a continuation order is expected.  The 
financial statements of RadioTel are consolidated into the Company's financial 
statements.
                                                                        
Since September 30, 1997, Clal Venture Capital Fund Limited Partnership (Clal), 
H.B. Radio Investment Limited Partnership (HB), and ComSor Investment Fund LDS 
(ComSor) purchased 95,000,  95,000 and 125,000 shares of RadioTel Ltd. Preferred
Stock, respectively, at a purchase price of $10 per share for a total investment
of $ 3,150,000. As a result, as of the date hereof, Clal, HB and ComSor own 
11.69%, 11.69% and 15.38% respectively, and the Company owns 41.23%, of RadioTel
Ltd. The reminder of 20% was reserved to be issued to employees and consultants 
of RadioTel Ltd. Of such 20%, Tuvia Barak, a consultant, and Rony Levy,
President, each received options to purchase 6% of RadioTel. In addition, 
the Company granted an option to holders of 437,500 shares 
of the Company's Common Stock which were purchased in a private placement in 
fiscal 1997 and in fiscal 1998 at $2.00 per share, the right to convert these
shares, until December 29, 1999, into shares of  RadioTel at the rate of 
five shares of the Company for one share of 
RadioTel.

Microkim, Ltd., a wholly-owned subsidiary located in Israel, acts as the 
Company's manufacturing, research and development arm, in addition to
developing innovative technologies for commercial use by the other operating 
divisions. Microkim has commercialized specialized RF and microwave products for
telecommunication applications, electronic warfare systems and radar systems.

Micel Wireless Corp., ("Micel Wireless") a joint venture between the Company and
Export Business & Services, Inc. ("EBS"), is an international telecommunications
company engaged in the sourcing, marketing and sales of wireless telephone
terminals and other related products. Micel Wireless has represented certain 
manufacturing companies and telecom agencies as purchasing agents and sales 
representatives.

Micel Wireless designs, manufactures and sells fixed cellular terminals for
Wireless Local Loop "WLL" applications in developing countries. The Company 
capitalizes on the technical capabilities of  RadioTel, the existing 
knowledge of the cellular and  wireless local loop markets 
and a network of distribution channels. Micel Wireless' initial focus has been 
in Latin America, where Micel Wireless expects to take immediate advantage of 
existing WLL opportunities.  
A majority of its sales have been made in Latin and South America.


Products
     The Company began operations through its wholly owned Israeli subsidiary, 
Microkim Ltd., by manufacturing microwave components such as ferrite devices
including isolators and control devices such as switches.  Subsequently, 
the Company developed a line of microwave circuit assemblies, 
subsystems and subassemblies for advanced electronic defense and certain medical
products.  
More recently, the Company has introduced stand-alone products to be marketed 
directly to end users.  
The Company maintains its technological knowhow and infrastructure for
manufacturing RF components to support its highly integrated products. 

     The Company focuses its activities in two main product lines:
     - Products for the commercial market.
     - Products for the military market.

I. Commercial Products

     The following are the Company's products for the commercial communications 
market.

   PCS Antenna. 
	
	Passive PCS Antenna 

Microkim had developed a low cost antenna for PCS application that requires easy
installation of point to point communication in hard environmental conditions. 
The high performance of the antenna enables an improvement of the base station 
range. 

	Active PCS Antenna 

For PCS applications that demand a relatively long RF cable between the Antenna 
and the subscriber unit, Microkim has developed an Active PCS Antenna for system
performance upgrading and system price reduction.  This Antenna improves the 
overall performance by placing the Low Noise Amplifier (LNA) inside the Antenna
(improving significantly the Noise Figure of the system) and also placing the 
Power Amplifier (PA) inside the Antenna (overcoming the loss of the cable). 
By using this Antenna, the coverage range can be greatly extended.  
The only link between the Antenna and the Subscriber unit is by the RF cable 
that carries the RF signals, the control signal and the DC power.

VXI Switch Matrix. State-of-the-art RF switch matrix allows for the automation 
and computer supervision of testing in the manufacturing process of RF products 
- primarily wireless products. This product is targeted to the large volume
wireless product manufacturers including: 

1. Wireless LANs (local area networks)
2. Cellular phones
3. GPS (Global positioning system) products 
4. DBS, cellular, and data communication products
5. PCS (Personal Communication Service)

II.Military Products

     The products for the military market include:

Radar Signal Simulator.  The Company manufactures, markets and sells a portable 
microwave  Radar Signal Simulator RSS 2000 ("RSS") used for testing an 
airplane's electronic warfare system's ability to detect the presence of threat 
radar by simulating the electronic signals emanating from such radar.   The RSS 
is portable, weighing approximately 25 pounds and is light enough to be carried 
by one person.  The RSS operates from a rechargeable battery or from a 115 
Volt/400 Hz external electrical source.  It contains several microwave frequency
sources, switches, amplifiers, and other components as well as a 
microprocessor and logic circuits which are programmed to control the unit. 
It contains an optional remote control which enables the RSS to be operated 
by one person from the cockpit of an airplane and operates independently from 
the aircraft electronic system.  
Several different simulated radar threats can be programmed into the RSS unit 
that can simulate two radar threats simultaneously.  During the fiscal year 
ended September 30,1998 ("Fiscal 1998") the Company sold seventeen units to 
three customers.  The sales price for the RSS may vary depending on a 
variety of factors including volume and market conditions.   The Company 
currently has permission from the Ministry of Defense of Israel to sell this 
product to certain foreign countries. 
The Company expects to continue sales of the RSS at the rate of eight to 
twelve units per year

     RSS-4000.   The Company entered into a Memorandum of Understanding on 
August 11, 1993 with Advanced Systems Development  ("ASD"), a subsidiary of 
Comptek , located in East Elmhurst, New York, to develop and market the next
generation of  RSS.  The new simulator was designed to enable the user to
select specific desired frequencies under computer program control.  
The RSS 2000, currently being offered for sale by the Company, includes fixed 
frequency sources whose frequencies are tuned at the factory level.  The feature
of user-selected frequencies will expand the range of applications of the radar 
simulator.  The system was designed to cover all frequency bands from 0.5 to 18 
GHz.  Development continued in Fiscal 1994 through 1996.  The Company delivered 
four units in Fiscal 1997. There were no sales of this product in Fiscal 1998.


     RSS-4000 is designed to be software compatible with a large simulator 
called "AMES", manufactured by ASD.  The Company believes that RSS-4000 
addresses the U.S. and European military markets, especially users of state of 
the art EW equipment. RSS-4000 will enable those customers to simulate
multiple emitter scenarios at the flight line and use scenarios developed in 
the lab on the AMES system.
     
     Altimeter Tester.  The Company has developed under contract a device that 
can be used to test a helicopter's altimeter on the flight deck without the 
necessity of removing the altimeter from the helicopter and testing it in a 
laboratory.  In  Fiscal 1996 and 1997, the Company sold two and four units, 
respectively, to a customer. There were no sales of this product in fiscal 1998.

	In addition to the above mentioned systems, the Company has developed a 
product line of various frequency sources.  These products serve as the building
blocks for the RF simulators and the infrastructure for the commercial  
communication equipment.  
The main products of this line are:

     Frequency Synthesizers.  The Company manufactures, markets and sells 
various frequency synthesizers. Frequency synthesizers are used to generate 
microwave signals having discrete frequencies which can be selected by an  
external electronic digital command.  The ability to switch promptly 
from one given frequency to another selected frequency while maintaining a 
stable selected frequency is a desirable feature in modern 
electronic communication and detection systems.  The Company has developed a 
novel compact synthesizer on behalf of a customer.  At the end of Fiscal 1993, 
the Company received an order for six units from the customer.  By the end of 
1994, the Company completed the product development and delivered the 
synthesizers to the customer in fiscal 1995.  The Company developed a 
synthesizer for commercial communication applications. 

       Digital Tuned Oscillator (DTO).  The Company has developed a new highly 
integrated assembly of 2-18GHz Digital Tuned Oscillator.  The product is based 
on the Company's ability to integrate various RF components such as: filters, 
low-noise amplifiers, VCO's and switches into a highly integrated
assembly.  The DTO is the main building block for the RSS-4000 and is sold 
as a stand-alone device.  The Company has delivered 25 units during Fiscal 
1996, 28 units in Fiscal 1997 and 54 units in Fiscal 1998. 

     Voltage Controlled Oscillators (VCO).  Voltage-controlled oscillators are 
used to generate microwave energy having frequencies that can be varied by an 
external variable voltage and in proportion to this voltage.  Such devices are 
used extensively in electronic warfare communications and radar systems to 
vary the frequency so that the enemy cannot detect the carrier frequency in 
which one transmits or receives information.

     Dielectric Resonance Oscillators (DRO).  These devices are used to generate
microwave energy at high frequencies using small dielectric cylinders that 
determine the precise frequency desired. Such small dielectric materials are 
replacing older technologies where the mechanical dimensions of certain 
cavities were used to determine the frequencies.   

The following table sets forth the approximate percentage of sales of the 
Company's products in Fiscal 1997 and 1998.

PRODUCTS			            PERCENT OF SALES 	      PERCENT OF SALES				
                  	        	1997				                  1998

DIGITAL RADIO			             36%				                   0%
RADAR SIGNAL SIMULATOR		     29%				                   38%
FREQUENCY SOURCES		   	      14%                  			  55%
OTHER PRODUCTS			            21%		              	  	   7%
TOTAL					                   100%	                    	100%

     Backlog.   At September 30, 1998 the approximate backlog of orders of the 
Company's products and services was approximately $1,000,000.  The backlog at 
September 30, 1997 was approximately $2,450,000.  Backlog includes only those 
customer commitments for which a delivery schedule has been  established by the 
Company and the customer.  It is expected that most of the current 
backlog will be shipped or completed within the ensuing twelve months.  
In the Company's experience, its backlog at a given time is not necessarily 
indicative of prospective revenue for any respective period.

Research and Development

      The Company is engaged in a continuing program of research and development
aimed at developing certain new and improved products.  Whenever possible, the 
Company attempts to obtain customer funding to adapt the Company's basic 
technology to specialized customer requirements.

      In September 1996, Microkim signed an agreement with ArrayComm Inc., a 
California Corporation located in San Jose, for the development of a family of 
Subscriber Unit Antennas (SUA) to be part of a Wireless Local Loop (WLL) system 
developed by ArrayComm.  The family of the SUA products will be comprise of four
different types of passive and active antennas.  Development of these 
antennas was completed in Fiscal 1997.

      In February 1998, Microkim signed an agreement with Radiotel, for the 
development of the Out Door Unit (ODU) to be a part of a RF Link 
that was developed by Radiotel.  Development of ODU has been completed 
in Fiscal 1998.
 
      In July 1997, Microkim signed an agreement with Micel Wireless for the 
development of an AMPS Rural Cellular Telephone, which is the main field of 
interest of Micel Wireless.Development has been completed in Fiscal 1998.  
Micel Wireless  is expected to provide a distribution channel for 
Microkim's AMPS Rural Cellular Telephone. In addition, Microkim will seek other 
suppliers and operators to generate additional AMPS Rural Cellular Telephone 
sales. 

      In December 1996, ArrayComm and Microkim received the approval from the 
Israel-U.S. Binational Industrial Research and Development Foundation (BIRD) for
funding of its joint project. BIRD agreed to fund up to 50% of actual approved 
expenditures.  BIRD will receive a royalty from the sale of products developed 
under this project up to 150% of the funds received. 
The Company received approximately $209,500 from BIRD.

     The development of the RSS and certain commercial microwave components have
been partly financed by the Office of the Chief Scientist of the Israeli
Ministry of Industry and Trade ("OCS").  
A royalty of 2%-3% must be paid from the sales of products developed with grant 
funds.  The royalty repayment is limited by the total grant amounts.

     During Fiscal 1997 and 1998, the Company's gross research and development 
activities aggregated $759,567 and $1,706,573, respectively, including grants of
$355,558 and $185,688, respectively, received from the OCS.

Manufacturing and Suppliers

     The Company offers both standard products manufactured and assembled by the
Company as well as customized systems, subsystems, components and subassemblies
in accordance with specific customer demands.  The Company is currently 
emphasizing subsystems and systems products.  The Company is capable of 
providing a full range of services including engineering design and
development, assembly and fabrication of circuits, subsystems and subassemblies.
The Company employs advanced manufacturing techniques geared towards production
to military, RF/microwave components and aerospace standards.  The Company's 
manufacturing facilities in Israel include a class 100,000 clean room.  
The clean room area consists of laminar flow benches where the critical bonding 
and dice-attaching processes and inspections are performed.  
The Company's manufacturing facilities include electrical and RF test equipment 
required for in-process and acceptance testing.  Special equipment at the 
Company's manufacturing facility also include broadband sweepers, automatic test
stations, bonding and dice attaching equipment. 

     In August 1991, Microkim was granted under the Israeli Law for
Encouragement of Capital Investment 1959, the approval to expand its production 
capabilities and increase its working capital.  The approval enables Microkim 
Ltd. to receive a guarantee from the State of Israel of loans from Israeli 
banks up to $1,240,000.   These loans were used to purchase equipment.  As 
of  September 30, 1998, a balance of approximately $23,004 of long term bank
loans has been guaranteed by the State of  Israel. 

     The Company's product assurance and reliability programs are designed to 
meet most applicable military standards. Established quality assurance programs 
monitor the performance to specifications of all materials used and labor 
performed in manufacturing.  Monitoring begins with the inspection of incoming 
materials and continues through the processing, assembly and testing of 
final products.  Since certain products are used for military purposes, the 
Company's quality control requires that it inspects these products before they 
are shipped to customers. The Company is required to keep detailed records of 
the results of such inspections.

     The Company has a number of sources of supply for most of the materials and
components necessary for the production of its products and systems.  The 
Company is constantly looking to qualify more than one supplier 
for its necessary component parts.  The Company generally purchases the 
component parts necessary to complete an order as soon as the order is confirmed
thereby attempting to eliminate shortages or delays in the manufacturing process
without the necessity of maintaining excess inventory.


Marketing and Principal Customers

     The focus of Micels commercial marketing effort will be to identify those 
telecommunications service providers who require fixed wireless solutions in 
their given territories and the cost benefits of wireless compared to copper
wire installation.  The target markets are those emerging countries 
where industry is rapidly developing but the countrys infrastructure and 
communication systems are lagging behind.  These emerging markets 
include South and Central America, Eastern Europe, the Philippines, China, 
India, Indonesia and Africa.

     Approximately 58% of the Company's sales during the fiscal year ended 
September 30, 1998, were made to customers in Israel directly by the Company's 
sales staff.   In Fiscal 1998,Elisra and Elta Electronics Industries Ltd.
represented approximately 26% and 13% of total sales, respectively. 
In addition, ASDI represented approximately 31% of total sales during Fiscal 
1998.  

     The Company markets its products in Israel through its sales and management
staff by calling upon customers or potential customers.  In addition, the 
Company is contacted directly by potential customers to provide them 
with specifications and quotations on the development and manufacture of 
specific components and subsystems.  The Company has determined that the 
preferred way to market its components outside Israel is through agents and 
representatives located in the country where the customer is located, 
since certain potential customers prefer to purchase their military 
components from a local source.  In addition, the Company's representatives
located in a country may be required to have the technical expertise to assist 
the customer and repair any defective components. 
     
     Effective as of January 15, 1993, the Company entered into an agreement 
with Quest Enterprise, Inc. ("Quest"), a marketing consulting company for 
military and communication companies, to provide marketing, consulting 
and other services as reasonably required by the Company for the purpose of
securing for the Company research and development contracts, joint development 
programs, strategic partnerships, business opportunities and production and 
sales contracts with North American companies and other entities on an exclusive
basis in North  America.  The Company has been paying Quest a fee in the amount 
of $5,000 per month plus expenses.  In addition, in the event that the services 
provided by Quest to the Company result in a contract being awarded 
to the Company, Quest will be entitled to a commission in the amount 
of one percent of  the revenues received.  In the event that the 
services provided by Quest result in a joint venture or other equity arrangement
between Micel Corp. and the potential partner, Quest will be entitled to a 
reasonable equity position in such joint venture not to exceed 15% of the
equity of the joint venture or a commission. Quest is also entitled to 25% of 
any royalties received by the Company from parties introduced to the
Company by Quest.

	 The Company entered into a consulting agreement with Crossways Consulting 
Group, Inc. ("Crossways") commencing January 1, 1999, which will replace the 
agreement with Quest. Crossways will  provide marketing, consulting and other 
services as reasonably required by the Company for the purpose of 
securing for the Company  joint development programs, strategic partnerships, 
business opportunities and production and sales contracts with North American 
companies.  
The Company will pay Crossways a fee in the amount of $6,000 per month plus 
expenses.  In addition, in the event that the services provided by 
Crossways to the Company result in sales in North America , Crossways will 
be entitled to 1.5% of such sales.  Crossways  will be granted options to 
purchase 220,000 shares of Common Stock at $2.00 per share until December 31,
2003, exercisable to the extent of 20% thereof each year.   
Mr. Tuvia Barak, a principle in Quest is the principal of Crossways. 
RadioTel Ltd. also has a consulting agreement with Crossway under which RadioTel
pays Crossways a monthly consulting fee of $5,000.


Competition	

     There are numerous manufacturers of microwave products in Israel, the 
United States and elsewhere which compete with the Company.  Many of these 
competitors are much larger than the Company with substantially 
greater financial resources, experience and more extensive engineering,
technical and research capabilities.  In addition, many large 
companies with substantially greater financial, technical and marketing 
resources than the Company, including some companies that 
are currently customers of the Company, have the capability to produce the 
products made by the  Company and could decide to enter the market in the 
future and compete with the Company.  The Company is not a major 
competitor in the worldwide microwave market, although the Company believes 
that it competes effectively in the Israeli market.  The Company's largest 
competitor in Israel is Elisra Ltd., a subsidiary of Tadiran Ltd.  
The Company believes that it is able to compete based on its quality, 
location, technical capability and experience.  In addition, its products 
have been field tested and the Company has the ability to produce and integrate 
many different microwave components into subassemblies and end-user products.  
The major competitor of the Company's RSS is A.A.I. which manufactures the 
APM 427.  The Company believes that the RSS is superior to the APM 427, 
since the RSS is less expensive, is much smaller and can be operated by only 
one person.  Three additional companies are now offering portable units 
which compete with the RSS 2000.  Republic Electronics of N.Y. is 
offering its MTS-300; Cal Corp. of Ontario, Canada has introduced its 
Micro-Tass Product; and Anarem in the United Kingdom offers a similar product.

	The major competitors of the Companys communication products are (i) 
California Microwave Inc. which manufactures digital point-to-point radios, 
medium haul radios for cellular communications and modems, and (ii) Digital 
Microwave Corp. which manufactures digital microwave radios for short and medium
haul communications for multiple digital lines. 

Patents

     The Company believes its ability to compete depends primarily on the 
technical competence, knowledge and experience of its management and personnel 
and their abilities to develop, improve and market its products.  Nevertheless, 
others may be able to learn certain of the Company's trade secrets or copy its 
product designs.  
The Company does not presently own any patents, however, the Company intends 
to file patent applications for any patentable inventions, processes or 
improvements that the Company may develop in the future when it believes that 
meaningful patent protection can be obtained.  

     The Israeli Ministry of Defense ("IMOD") usually retains certain rights to 
technologies and inventions resulting from the Company's performance as a 
contractor under IMOD contracts and may generally disclose such information to 
third parties, including other defense contractors who may be competitors of the
Company.  When the IMOD funds research and development, it usually acquires 
rights to data and title to inventions, and the Company may retain a 
non-exclusive license for such inventions.  The IMOD is, as a rule, entitled to 
receive royalties on export sales, to the extent that such sales resulted from 
IMOD-financed development.  However, if the IMOD purchases only the end product,
the Company normally retains the principal rights to the technology.

Government Regulations

     Many of the component parts of the Company's products are imported from the
United States.  Accordingly, the Company and/or its suppliers may be 
required to obtain an export license, preference rating or other government 
authorization in connection with components purchased in the United States.  To 
date, the Company has not experienced any difficulty in obtaining such 
authorizations or licenses.  In addition, unless the Company obtains prior 
authorizations from the Office of Export Administration of the Department of 
Commerce of the United States, the Company will not be allowed to export or 
reexport to certain restricted countries, directly or indirectly, any of the 
Company's products containing components imported from the United States.  
The Company does not expect that this will be detrimental to the Company's 
business.  In addition, the Company will require the permission of the Ministry 
of Defense of Israel before the Company could export any military microwave 
system.  There can be no assurance that the Company will be able to obtain such 
permission on a timely basis or at all.  However, the Company has received such 
permission for the export of the RSS, Altimeter tester and microwave 
components to certain countries.

Product Warranty and Service

     Generally, the Company provides the customer, at the time a purchase 
contract is entered into, with a detailed list of Acceptance Test Procedures.  
These procedures identify which tests the Company's products must undergo and 
pass before the individual product would be delivered and accepted by the 
customer.  Certain customers require and pay for a Quality Test Procedure 
("QTP") which is a specific procedure for testing the quality of certain of the 
Company's products based on that customers specifications.  The Company 
generally provides a warranty for parts and labor for one year from delivery of 
the product, although in some cases a longer warranty period may be given.  The 
Company currently services any warranty claims itself.  The Company's rate of 
returns for repair under the warranty on all products, other than on the Radio 
Module, is similar to that prevailing in the industry and annually averages 
between 1/2% and 1% of total sales.

Employees

     At September 30, 1998, Microkim had a total of 25 employees in Israel 
including 8 in research and development, 6 in general management, 
administration and marketing and 11 in production.  RadioTel had 17 employees, 
3 in general and administrative and 14  in research and development.   
Management believes that its relations with its employees are satisfactory.

     The Company's employees do not belong to any labor organization.  
Nevertheless, certain provisions of the collective bargaining agreements between
the Histadrut (General Federation of Labor in Israel) and the Coordination 
Bureau of Economic Organizations (including the Industrialist's Association) are
applicable to the Company's Israeli employees by order of the Israeli Ministry 
of Labor.  These provisions concern mainly the length of the work day, minimum 
daily wages for professional workers, insurance for work-related accidents, 
procedures for dismissing employees, determination of severance pay and other 
conditions of employment.  The Company generally provides its Israeli 
employees with benefits and working conditions beyond the required minimums.  

     A general practice followed by the Company, although not legally required, 
is the contribution of monies on behalf of its senior Israeli employees to a 
fund known as "Managers Insurance."  This fund provides a combination of a 
savings plan, insurance and severance pay benefits to the employee, giving the 
employee a lump sum payment upon retiring and securing his right to receive 
severance pay, if legally entitled, upon termination of employment.  
The employee contributes an amount equal to 5% of his wages and the employer 
contributes an additional 13 1/3% of his wages.

     In addition, Israeli law generally requires severance pay (generally one 
month's salary for each year of employment) upon the retirement or death of an 
employee or termination of employment without due cause.  Furthermore, Israeli 
employees and employers are required to pay predetermined sums to the 
National Insurance Institute, which is similar to the United States Social 
Security Administration.  Payments, up to a ceiling, amount to approximately 
12% of wages, with the employee contributing approximately 60% and the employer 
approximately 40%. 

Item 2
Legal Proceedings

     The Company is unaware of any pending legal proceedings, the outcome of 
which, in the Company's view, will have a material adverse effect on the 
Company's consolidated financial position or results of operations.  

     In July 1994, the Company commenced a civil action in Israel in the 
approximate amount of $3,000,000 against M/A Com and Hillel Weinstein for 
false representations made by M/A Com and Dr. Weinstein in connection with 
the purchase of Microkim Ltd. from M/A Com and for subsequent damages 
resulting from such misrepresentations.   Dr. Weinstein is no longer a defendant
or counter claimant in this action as a result of the agreement reached on May 
27, 1996. M/A Com filed a motion for cancellation of the Companys request for 
out of boundaries jurisdiction.  This motion was granted.  Micel reapplied to 
the court for permission to serve M/A Com extraterritorially, submitting 
additional affidavits in support of the application. The court rejected the out 
of boundary jurisdiction and this suit is being discontinued.


Item 3
Properties

     The Company's executive offices consist of approximately 400 square feet 
located at 445 Central Ave. Cedarhurst, New York.  Microkim's executive offices 
and manufacturing facilities are located in a new light industrial area in the 
city of Tirat Hacarmel, outscirts of Haifa, Israel. The new location contains 
approximately 600 square meters at a monthly rental of approximately $8,750
exclusive of utilities.  The rent is linked to the Consumer Price Index.   
The new lease is for a period of five years.  Microkim has an option to renew 
the lease for an additional three years.   RadioTel's executive offices 
are located in Givat Shmuel, Israel. The Company believes that
its properties are sufficient for its needs at the present time.  


Item 4 
Submission of Matters to a Vote of Security Holders

     The Company held its annual meeting of shareholders on November 2, 1998. 
At the meeting, Heather Loren, Ron Levy and Barry Braunstein were each 
re-elected as directors of the Company for a term of one year or until his/her 
successor is duly elected and qualified.  
     

Part II

Item 5
MARKET FOR THE COMPANY'S COMMON 
EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's securities were listed for trading on the OTC Bulletin Board 
until May 1998 under the trading symbol MICE.  Prior to November 25, 1996, the 
effective date of the ten-for-one reverse stock split, the shares of Common 
stock, $.001 par value, were trading under the symbol MICL.  The following table
sets forth the range of high and low bid prices of the Company's Common Stock 
for the fiscal quarters of 1997 and 1998.  These quotations represent prices 
between dealers in securities, do not include retail mark-ups, mark-downs or 
commissions and do not necessarily represent actual transactions.   

                                   Fiscal Year Ended		 Fiscal Year Ended
                                   September 30,1997		 September 30, 1998
                                   High Bid  Low Bid	  High Bid   Low Bid

COMMON STOCK (MICE) 
First Quarter		                    3             3      		3	         2	
Second Quarter		                   3             3			     2.50	      .50
Third Quarter		                    4             3			     .50	       .50
Fourth Quarter		                   3             2			  
 
_______________________

On December 31, 1998, the closing bid price of the Common Stock on OTC Bulletin 
Board was $2.00.

     The Company has not paid a dividend on its shares of common stock and does 
not anticipate paying cash dividends in the foreseeable future. 

Item 6
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General   
     All of the Company's operations in Fiscal 1998 were conducted through its 
Israeli subsidiaries, Microkim and RadioTel.  Microkim and RadioTel 
maintains their financial records in United States Dollars.  Transactions and 
balances originally denominated in dollars are presented at their original 
amounts.  Transactions and balances in currencies other than the dollar are 
remeasured into dollars in accordance with the principles set forth in Statement
No. 52 of the Financial Accounting Standards Board.  

     Fluctuations in the rate of exchange between the dollar and such other 
currencies result in the recognition of financial income or loss.  The Company 
manages its Israeli operations with the object of protecting against material 
net financial loss in U.S. dollar terms from the impact of Israeli inflation and
currency devaluation on its non-U.S. dollar assets and liabilities.  In the 
twelve month period ended September 30, 1998 ("Fiscal 1998"), the Israeli 
Consumer Price Index ("ICPI") increased by 4.66%, as compared with a 9.95% 
aggregated devaluation of the shekel against the U.S. dollar.  There can be no 
assurance that the Government of Israel will devalue the shekel from time to 
time to offset the effects of inflation in Israel.  See Note 2 of the Notes to 
the Consolidated Financial Statements.

     In computing taxable income, the Company's Israeli subsidiary is entitled 
under Israeli income tax rules to certain deductions designed to avoid taxation 
of inflationary gains measured in Israeli  currency.  If these laws or 
governmental programs were modified or terminated as they apply to the 
Company, there could be an adverse effect on the results of operations of the 
Company.  

Financial Condition:

        The Company's operations in Fiscal 1998 have been financed principally 
by revenues from operations, proceeds from the sale of Common Stock in a 
private placement and research and development grants.

In Fiscal 1998, the Company  issued 150,000 shares of common stock at $2.00 
per share and raised $400,000 in a private placement. A substantial portion of 
these funds was used to fund the Company's financial commitment to 
RadioTel which aggregated $1,749,970 through October 30, 1998.

        The total amount of outstanding loans, credit facilities and guarantees 
from banks at September 30,  1998 were approximately $351,360 and is 
secured by liens on certain of Microkim's property and equipment, share capital 
and insurance rights, and by a secured interest in all of Microkim's assets. 
This amount includes approximately $23,004 of long term borrowings from Israel 
Industrial Development Bank Ltd. to be repaid between 1998 and 2000.  This 
also includes approximately $98,640 of performance guarantees pursuant to 
contracts with customers.  The Company had approximately $87,770 unused 
lines of credit.

         The Company is committed to pay royalties to the Office of the Chief 
Scientist of the State of Israel ("OCS") in respect to products under 
development for which the OCS participated by way of grant.  The royalty is 
computed at the rate of 2%-5% of proceeds from sales of such products up to 
the amount of such grant (approximately $1,113,738 as of  September 30, 
1998).  Royalties paid during Fiscal 1998 amounted to approximately $23,223.

     In the year ended September 30, 1998, net cash and cash equivalents 
increased by $937,604 as a result of $2,496,548 issuance of subsidiary shares, 
$400,000 from receipts on account of shares, $300,000 from issuance of 
common stock and $222,098 from short-term bank credit.  This was offset by 
$1,834,549 from operating activities, $590,230 purchase of equipment, 
$50,000 investment in affiliated company, $18,724 repayment of long term 
debt .

     As of September 30, 1998, $229,719 of short term bank credits were 
denominated in New Israeli Shekels and $77,425 of cash and cash equivalents 
are denominated in  New Israeli Shekels.

     Due to the weakness of the defense market, the Company intends to place 
emphasis on increasing its commercial line of products and commercial market 
base.  It is the policy of the Company to accept only those orders which are 
worthwhile economically and the Company has also tended to accept mainly 
larger orders for a limited number of projects, the most important of which 
tend to be with strategic partners as with the projects with ASDI and ArrayComm.
A significant portion of the future revenues of the Company will be dependent 
on the success of these two projects.


Results of Operations
 Year ended September 30, 1998 compared to the year ended September 30, 
1997.     	                            

     Sales in the Fiscal year ended September 30, 1998 ("Fiscal 1998") were 
$2,740,476 as compared with $3,720,760 in the year ended September 30, 
1997 ("Fiscal 1997").The decrease in sales compared to Fiscal 1997, resulted 
from the completion of a certain project in 1997 representing sales of 
$1,189,000 and no follow up sales of radios developed in this project took 
place in Fiscal 1998.


     Cost of sales in Fiscal 1998 was 58% of sales or $1,595,035, as compared 
with 72% or $2,688,709 in the same period in 1997.  In Fiscal 1998, cost of 
materials was approximately 36% of sales compared to approximately 46% of 
sales in Fiscal 1997, subcontractor expenses were approximately 2% of sales in 
Fiscal 1998 compared to approximately 1% of sales in Fiscal 1997, salaries 
were approximately 21% of sales in Fiscal 1998 compared to approximately 
16% in Fiscal 1997 and other expenses and depreciation were approximately 
1% of sales in Fiscal 1998 compared to  approximately 4% of sales in Fiscal 
1997.

     Research and Development expenses net of government subsidies increased 
from $404,009 or 11% of sales in Fiscal 1997 to $1,520,885 or 55% of sales in 
Fiscal 1998.  The increase was caused primarily by an increase in the scale of  
the Company's research and development activities by RadioTel.

     Selling and Marketing expenses increased from $118,206 or 3% of sales in 
Fiscal 1997 to $218,525 or 8% of sales in Fiscal 1998.  The increase resulted 
primarily from an  increase in marketing activities .

     General and Administrative expenses increased from $680,976 or 18% of 
sales in Fiscal 1997 to $1,145,392 or 42% of sales in Fiscal 1998, primarily as 
a result of the increase of operations of RadioTel . 

    The Company's results of operations include its equity in the loss of its 
affiliate, Micel Wireless Corp., amounting to $24,041.  This affiliate 
commenced operations October 1, 1996.

    In Fiscal 1998, Interest expenses were $68,819 or 2% of sales as compared 
with $75,497 or 2% of sales in Fiscal 1997.  

     In Fiscal 1998, Interest  income increased to $45,472 compared with 
$18,366 in Fiscal 1997,mainly as a result of interest from RadioTel's 
fixed-term deposits.  

     Due to the above, in Fiscal 1998, the Company reported a net loss of 
$1,117,654 or $.019  per common share and in Fiscal 1997, the Company 
reported a net loss of $209,026. The minority interest in losses of subsidiaries
in fiscal 1998 was $649,095.

Management and Control Systems; Year 2000 Compliance
The Company has taken steps to ensure that its systems, controls, and 
computer systems are adequate to address its current needs and to adequately 
address the Year 2000 operational problems.

ITEM 7.   Financial Statements

          See Pages F-1  through F-21.


ITEM 8.   Changes in and disagreements with Accountants on Accounting and
FinancialDisclosure

          Not Applicable


ITEM 9.  Directors and Executive Officers:


The officers and directors of the Company are as follows:  


  Name        	     Age      	Position       
  
  Ron Levy  		      50  	     President and Director

  David Selengut 	  43 	      Secretary

  Barry Braunstein 	39 	      Director

  Heather Loren 		  30 	      Director

Ron Levy has been President and Director of the Company since October 1, 
1996 he has also been the President of RadioTel since October 1, 1996 . Prior to
that time he was a consultant to Microkim Ltd, the Company's wholly owned 
subsidiary.  From October 1992 to November 1995 he was President and Chief 
Executive Officer at EUROM Flash Ware Solutions Ltd. and from September 
1990 to September 1992 he was Project Manager at SanDisk Corporation in 
Santa Clara, CA.  From September 1982 until September 1990 he was a 
manager of Tadiran Communication Micro Electronic Center.  Mr. Levy has 
received his B.S. degree in Electrical Engineering and Computer Science from 
the University of California in Berkeley.

David Selengut has been the secretary of the Company since November 1997.  
Mr. Selengut has been a member of the law firm Ellenoff Grossman & Schole 
LLP since May 1998, a partner in the Law Firm of Bernstein & Wasserman, 
LLP from  July 1997 to May 1998and was a Partner at the Law Firm of Singer, 
Bienenstock, Zamansky, Ogele & Selengut, LLP from May 1995 until April 
1997.  Those firms have acted as counsel to the Company with respect to 
certain matters.  From May 1988 until April 1995, he was an associate at the 
Law Firm of Neiman Ginsburg & Mairanz P.C., New York, New York.  

Barry Braunstein has been a director of the Company since April, 1994.  From 
1983 to the present, he has been the administrator of Laconia Nursing Home in 
Bronx, New York.  Mr. Braunstein received his B.A. Degree from Adelphi 
University in 1985.

Heather Loren has been a director of the Company since August 1995.  From 
September 1994 until the present, Ms. Loren has been a consultant with the 
firm of Price Waterhouse Coopers, LLP.  From December 1991 until August of 
1992, she was in geriatric research at Hadasa Hospital in Jerusalem.  From 
June 1989 until December 1991 she held various managerial positions at the 
Bridgeport Healthcare Center and White Plains Nursing Home.  She received 
her Masters degree in management from Northwestern University in 1994 and 
a B.A. degree from Columbia University. 

Each of the Company's Directors has been elected to serve until the next annual 
meeting of the Shareholders.  The Company's executive officers are appointed 
annually by the Company's Directors.  The   Secretary is a non-executive 
position.   Each of the Company's Directors and  Officers continues to serve 
until his successor has been duly elected and qualified.  The outside directors 
are entitled to receive $6,000 per year from the Company.  The directors of 
Microkim are Ron Levy and Tzvi Siegel.  To the Company's knowledge, there 
were no delinquent Section 16(a) filers for transactions in the Company's 
securities during fiscal year ended September 30, 1998.


Item 10.  Executive Compensation:


Executive Compensation

	The following table sets forth all compensation received for services 
rendered to the Company by certain executive officers during each of the past 
three fiscal years ended September 30, 1998.  No other executive officer 
received compensation in excess of $100,000 during any of the last three fiscal 
years. 


SUMMARY COMPENSATION TABLE

                                  Annual                     Long Term
                                  Compensation               Compensation
Name and Principal                             Other Annual  Awards
Position               Year       salary ($)   Compensation  Options#

                       1998       $106,883     $24,797  (1)    0(2)
Ron Levy, 
President, Chief Executive 
Officer
                       1997       $95,149      $25,883  (1)    -0-(2)
___________________________
(1)	Total value of non-cash compensation.
(2)	Mr. Levy receives his salary from RadioTel Ltd.  He also 
received options to purchase six percent of the stock of RadioTel 
Ltd., a subsidiary of the Company, exercisable for a nominal 
amount.  The option vests to the extent of one-half at the end of 
two years from the date of commencement of employment  and 
the remainder at the rate of two percent per month commencing 
on the 25th month from the date of employment.
			
OPTION GRANTS IN 1998


                       Precent of Total 
                       Options Granted
Name (a)  Options      To Employees in       Exercise     Expiration
          Granted (b)  Fiscal Year 1998(C)   Price (d)     Date



Ron Levy    0 (1)      - 0 -                 - 0 -        

Benjamin 
Sporn (2)  100000       100%                 $2.00       October 5, 2007
___________________________
(1)	See Note (2) to the Summary Compensation Table
(2)	Mr. Sporn was Chairman of the Board until November 14, 1997.

AGGREGATED OPTION EXERCISES IN 1998 AND FOR YEAR-END VALUES







                                           Number of           In-the-Money
                                           Unexercised Options Options at Fiscal
                                           at Fiscal-Year End  Year-End ($)    

Name    Shares Acquired      Value         Exercisable/        Exercisable/
        on Exercise (#) (b)  Realized ($)  Unexercisable(d)    Unexercisable(e)
Ron 
Levy    -0-                  -0-           50,000/50,000(1)    -0-/-0-

(1)	Does not include the option described in note (2) to the Summary 
Compensation Table.

	
Stock Option Plan

	In November 1990, the Company's Board of Directors adopted, and 
its Shareholders approved, the 1990 Stock Option Plan (the "Plan"), which 
was amended by the Shareholders at the 1996 annual meeting and provides 
for the grant of incentive and/or non-qualified stock options to purchase up 
to 800,000 (post split) shares of Common Stock to any officer, director, 
consultant or employee when the Board, in its sole discretion, determines 
that a grant of options to such person would be in the best interests of the 
Company.  Incentive stock options granted under the Plan shall be pursuant 
to a written agreement for a term not exceeding ten (10) years (five (5) years 
for Shareholders owning more than ten percent (10%) of the Common 
Stock of the Company).  The exercise price of the options shall be 
established by the Board at the time of grant of the option but cannot be less 
than one hundred percent (100%) of the fair market value at the time of 
grant of the option.  If the recipient owns more than ten percent (10%) of 
the Common Stock of the Company, the exercise price must be at least one 
hundred and ten percent (110%) of the fair market value of the underlying 
Common Stock at the time of grant.  The aggregate fair market value 
(determined as of the date of grant) of the shares of Common Stock with 
respect to which incentive stock options are exercisable for the first time by 
an employee during any calendar year may not exceed $100,000.  Other 
terms and conditions of options granted under the Plan, which expires 
November 2000, are determined by the Board of Directors.  The number of 
shares subject to outstanding options will be appropriately adjusted upon 
the happening of any stock split, stock dividend, recapitalization, 
combination, subdivision, issuance of rights or other similar corporate 
change.   Persons who are residents of the State of Israel for the purpose of 
the Israeli Currency Control Regulations, who own more than 5% of the 
total outstanding shares of the Company would be required to get the 
consent of the Bank of Israel to accept offers of stock options from the 
Company.  To date the Company has granted options to purchase 527,120 
shares of Common Stock, $.01 par value.  None of the options previously 
granted under the Plan has been exercised. 

	Mr. Tuvia Barak, a principal in Crossways Consulting Group, Inc. 
and Mr. Ron Levy, President of the Company, each received an option, 
exercisable for nominal value, to purchase up to 6% of the equity of 
RadioTel Ltd., a subsidiary of the Company, the options vest to the extent of 
one half at the end of two years and the remainder at the rate of 2% per 
month commencing on the 25th month from date of commencement of 
employment.  The options will only vest if such persons are still an employee 
or a consultant to RadioTel.

Item 11.  Security Ownership of Certain Beneficial Owners and 
Management

  The following table sets forth, as of November 30, 1998, certain 
information as to the stock ownership of each person known by the 
Company to beneficially own 5% or more of the Company's outstanding 
Common Stock, by each director of the Company who owns any shares of 
the Company's Common Stock and by all officers and directors as a group:

						 
							                                           Percentage of 
Name of			           Amount and Nature of	        Class as of    
Beneficial Owner	    Beneficial Ownership(1       November 30, 1998

Bonnie Septimus (2)		460,600			                   7.4%    
72 Lord Avenue
Lawrence, New York

Barry Septimus (3)		 578,746			                   9.1%
72 Lord Avenue
Lawrence, New York


Heather Loren (4)		  178,125			                   2.9%

Barry Braunstein (5)	243,500			                   4.0%

Ron Levy (6)			      50,000			                     *

Tuvia Barak (7)			   319,183			                    5.1%

All officers and directors
as a group 
(4 persons)		        434,125			                    6.9%                

                      


 *	Less than 1%

(1)  Except as otherwise indicated, all shares are beneficially owned, 
and sole voting and investment power is held by the persons named.

(2)  This includes 6,000 shares of Common Stock owned by certain of 
her children but does not include shares listed below owned by her 
husband, Barry Septimus, shares of Common Stock held in trust for 
her children where she is not the Trustee or shares owned by her 
independent children.  

(3)  Does not include Shares owned by Mr. Septimus' children or his 
wife, Bonnie Septimus, listed above. Includes 132,465 shares of 
Common Stock  issuable upon exercise of options owned by Quest 
Enterprises, Inc which is 50% owned by Mr. Septimus and 30,718 
shares issuable upon exercise of a warrant.

(4) Includes 16,500 Shares issuable upon exercise of stock options.

(5) Includes 18,500 Shares issuable upon exercise of stock options and 
Shares which have been purchased by Mr. Braunstein and his family in 
private placements. 

(6) Consists of shares issuable upon exercise of stock options.
 
(7) Includes 176,465 shares issuable upon exercise of options owned by 
companies in which Mr. Barak is a principal and 30,718 shares issuable 
upon exercise of a warrant.

 Item 12.  Certain Relations and Related Transactions
 

	In January 1993, the Company entered into an agreement with 
Quest Enterprises, Inc. ("Quest"), of which Barry Septimus, a principal 
shareholder of the Company, and Tuvia  Barak each owns 50%, to 
provide marketing, consulting and other services as reasonably required 
by the Company for the purpose of securing for the Company research 
and development contracts, joint development programs, strategic 
partnerships, business opportunities and production and sales contracts 
with North American Companies and other entities on an exclusive basis 
in North  America.  The Company has been paying Quest a fee in the 
amount of $5,000 per month plus expenses (reduced from $6,000 per 
month).  In addition, in the event that the services provided by Quest to 
the Company result in  a contract being awarded to the Company, Quest 
will be entitled to a commission in the amount of 1.5% of the revenues 
received.  In September 1996, Quest voluntarily reduced this percentage 
to 1% at the same time as the Company employed Ron Levy who is to 
receive .05% of U.S. sales.  In the event that the services provided by 
Quest result in a joint venture or other equity arrangement between 
Micel Corp. and the potential partner, Quest will be entitled as a 
commission to a reasonable equity position in such joint venture not to 
exceed 15% of the equity of the joint venture.  Quest is also entitled to 
25% of any royalties received by the Company from parties introduced 
to the Company by Quest.  This agreement will expire December 31, 
1998 and has been replaced with an agreement with Crossways 
Consulting Group Inc. described below. 

	 The Company entered into a consulting agreement with 
Crossways Consulting Group, Inc. ("Crossways") commencing January 
1, 1999, which will replace the agreement with Quest.  Mr. Tuvia Barak  
is the principal of Crossways. Crossways will  provide marketing, 
consulting and other services as reasonably required by the Company 
for the purpose of securing for the Company  joint development 
programs, strategic partnerships, business opportunities and production 
and sales contracts with North American companies.  The Company will 
pay Crossways a fee in the amount of $6,000 per month plus expenses.  
In addition, in the event that the services provided by Crossways to the 
Company result in sales in North America , Crossways will be entitled to 
1.5% of such sales.Crossways  will be granted options to purchase 
220,000 shares of Common Stock at $2.00 per share until December 31, 
2003, exercisable to the extent of 20% thereof each year. RadioTel Ltd. 
also has a consulting agreement with Crossways Consulting Group, Inc. 
under which RadioTel pays Crossways a monthly consulting fee of 
$5,000.

	Mr. Tuvia Barak, and Mr. Ron Levy, President of the Company, 
each received an option, exercisable for nominal value, to purchase up to 
6% of the equity of RadioTel Ltd., a subsidiary of the Company.  The 
options vest to the extent of one half at the end of two years and the 
remainder at the rate of 2% per month commencing on the 25th month 
from date of commencement of employment.  The options will only vest 
if such persons are still an employee or a consultant to RadioTel.

	In addition, the Company has been informed that Mr. Barak 
and Mr. Levy collectively own 10% of EBS, Inc., the other Shareholder 
of Micel Wireless Corp.

Item 13.  Exhibits, List and Reports on Form 8-K.
 
   (a) Exhibits.
 
   3.1    -   Certificate of Incorporation of Registrant (1)
   3.2   -    Certificates of Amendment to the Certificate of Incorporation of  
Registrant (1)
   3.3    -   By-Laws (1)
   4.1    -   Form of Warrant Agreement (1)
   4.2    -   Form of Unit Purchase Option (1)
   10.3   -  1990 Stock Option Plan (1)
   10.4   -   Agreement with Quest Enterprises, Inc. (2)
   10.5   -   Representative Agreement with RF Electronic Sales, Inc.  (5)
   10.6   -  Memorandum of Understanding with Advanced Systems Development 
Inc. (5)
   10.7   -  Organization Agreement among Microkim Ltd, Fairchild Data Inc., 
Teuza  -    A Fairchild 	  
Technology Venture Ltd. and Misat Ltd. (3)
   10.8   -   Agreements dated as of October 1, 1995 between Teledata 
Communications Ltd., Mikrokim Ltd. and              -      AIL Systems, Inc. (6)
   10.9   - Shareholders Agreement with Export Business & Services, Inc.(7)
   10.10 - Agreement with ArrayComm, Inc. (7)

   10.11 - Stock Purchase Agreement between the Company, RadioTel Ltd. and Clal 
Ventures Capital Fund 	 Limited Partnership. (8)
   10.12- Agreement between the Company and Crossways Consulting Group, Inc.

   (1)  Filed with Registration Statement 33-40512
   (2)  Filed with Form 10-Q for the quarter ended June 30, 1993
   (3)  Filed with Form 10-K for year ended September 30, 1992
   (4)  Filed with Form 10-KSB for the year ended September 30, 1993
   (5)  Filed with Form 10-KSB for the year ended September 30, 1994
   (6)  Filed with Form 10-KSB for year ended September 30, 1995 
          Reports on Form 8-K
   (7)  Filed with Form 10-KSB for year ended September 30, 1996
         None  
   (8)  Filed with Form 10-KSB for year ended September 30, 1997
                  



MICEL CORP. AND SUBSIDIARIES


CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998


IN U.S. DOLLARS

INDEX

						Page
	
Report of Independent Auditors			             F-2
	
Consolidated Balance Sheet			                 F3 - F4
	
Consolidated Statements of Operations		       F5
	
Statements of Changes in Shareholders' Equity	F6
	
Consolidated Statements of Cash Flows		       F7 - F8
	
Notes to Consolidated Financial Statements	   F9 -F25
	
Signatures					                               F26




- - - - - - - -
 


REPORT OF INDEPENDENT AUDITORS
To the Shareholders of

MICEL CORP. AND SUBSIDIARIES

	We have audited the accompanying consolidated balance sheet of Micel Corp. 
("the Company") and its subsidiaries as of September 30, 1998, and the related 
consolidated statements of operations, changes in shareholders' equity and cash 
flows for the year then ended. These financial statements are the 
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audit. 

	We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether 
the financial statements are free of material misstatement. An audit 
includes examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation. 
We believe that our audit provides a reasonable basis for our opinion.

	In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the 
Company and its subsidiaries as of September 30, 1998, and the consolidated 
results of their operations and cash flows for the year then ended, in 
conformity with generally accepted accounting principles.
 

Tel Aviv, Israel							                            KOST, FORER and GABBAY
January 12, 1999

F - 2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
Micel Corp.:

We have audited the accompanying consolidated balance sheet of Micel Corp. 
(a New York corporation) and subsidiaries as of September 30, 1997, and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for the years ended September 30, 1997 and 1996.  These
financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Micel Corp. and
subsidiaries as of September 30, 1997, and the results of their operations and
their cash flows for the years ended September 30, 1997 and 1996, in 
conformity with generally accepted accounting principles.


New York, New York				                            ARTHUR ANDERSEN LLP.
January 9, 1998


MICEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
In U.S. dollars

                                    								September 30, 1998
												
	ASSETS				
				
CURRENT ASSETS:				
	Cash and cash equivalents                   $ 1,428,604
	Trade receivables (less allowance for doubtful accounts
		of $ 42,000)					                          727,332
	Other accounts receivable				              	183,821
	Inventories (Note 3)					                   665,071
								
Total current assets						                   3,004,828
				
				
INVESTMENT IN AFFILIATED COMPANY (Note 4)		  145,704
				
				
DEPOSITS WITH INSURANCE COMPANIES
	AND PENSION FUNDS (Note 8)				              350,855
				
PROPERTY, PLANT AND EQUIPMENT, NET (Note 5)	 684,120
						
Total assets							                          $ 4,185,507


F - 3
				
		LIABILITIES AND SHAREHOLDERS' EQUITY				
						
CURRENT LIABILITIES:				
				
	Short-term bank credit (note 6)				         $  229,719
	Current maturities of long-term debt			     15,500
	Accounts payable and accrued liabilities			 830,966
	Advances from customers					                43,900
				
Total current liabilities					               1,120,085
				
				
ACCRUED SEVERANCE PAY (Note 8)			            429,431
				
				
LONG-TERM DEBT, (Note 7)					                7,504

PREFERED SHARES OF SUBSIDIARY			             1,159,222
				
COMMITMENTS AND CONTINGENCIES (Note 10)				
				
MINORITY INTEREST					                       688,231
				
SHAREHOLDERS' EQUITY (Note 11):				
				
Common stock, $ 0.01 par value - 
25,000,000 shares	authorized; 5,900,380 
shares issued and outstanding		              59,004
Additional paid-in capital					              7,723,842
Receipts on account of shares				           	400,000 
Accumulated deficit						                    (6,966,466)
Deferred compensation 					                  (435,346)
				
Total shareholders' equity					              781,034
				
								                                     $ 4,185,507

The accompanying notes are an integral part of the financial statements.

F - 4

MICEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
In U.S. dollars
                                         		Year ended September 30,
                                    							1998			             1997
												
Sales                               							$ 2,740,476		       $ 3,720,760
Cost of sales							                       1,595,035		         2,688,709
				
Gross profit							                        1,145,441		         1,032,051
				
Research and development expenses, net			  1,520,885		         404,009
Selling expenses						                     218,525			          118,206
General and administrative expenses		 	 	  1,145,392	 	        680,976          
				
Total operating expenses					              2,884,802		         1,203,191
				
Operating loss						                       1,739,361		         (171,140)
				
Interest and other income					             45,472			           18,366
Interest and other expense					            (48,819)			         (75,497)
Loss before income (losses) from 
affiliated companyand minority interest	 		1,742,708		         228,271
Income (losses) from affiliated company			 (24,041)			         19,245
Minority interest in losses of subsidiary		649,095		          	-
				
Net loss							                            $ (1,117,654)		     $ (209,026)
				
Basic and diluted net loss per share				   $ (0.19)			         $ (0.04)
				
Number of Shares used in computing 
basic and diluted net loss per share				   5,862,366		         5,560,630
				

The accompanying notes are an integral part of the financial statements.

F-5



MICEL CORP. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
In U.S. dollars
                                               												Deferred
		  						  			                                            compensation
        Common stock	  Additional Receipts			             	from issuance of
				  Number of       	paid-in	   on account	 Accumulated	 stock options
				  shares		 Value		 capital		  of shares		 deficit		    to employees	Total

Balance as of October 
1, 1996	
     5,365,380	$ 53,654		$5,785,986	$- 		         $ (5,639,786)	$-		   $ 199,854

Issuance of common stock
(net of issuance expenses)
in a private placement		
     385,000		  3,850		   747,400		  -		          -	        	  -        751,250

Deferred compensation from
issuance of stock options
to employees		
     	-		       -		       498,240		  -		           -		         (498,240)	   -			

Amortization of deferred
compensation from issuance
of stock options to 
employees	
      -		       -		        -		       -	          	-		         134,940		  134,940

Net loss			
     	-		       -		        -		       -		        (209,026)	     -		     (209,026)

Balance as of September 
30, 1997	 
   5,750,380	 57,504		  7,031,626	   -		        (5,848,812)	  (363,300)	 877,018

Issuance of common stock		
  150,000		   1500		    298,500		    -		         -		           -		      300,000

Receipts on account of 
shares	 
   -		        -		         -		      400,000		     -				                  400,000

Compensation from issuance	
of options to consultants		
   -		        -		       135,000		    -		         -		           -		      135,000

Deferred compensation from
issuance of stock options												
to employees			
   -		        -		       258,716		    -		         -		          (258,716)	    -

Amortization of deferred
compensation from issuance					
of stock options to 
employees	
   -		        -		        -		         -		          -		          186,670		 186,670

Net loss
			-	        	-        		-	        	(1,117,654)   -	          	(1,117,654)

Balance as of September 30, 
1998
  	5,900,380	$59,004	  $7,723,842	  $400,000	  $(6,966,466)	 $(435,346) $781,034

The accompanying notes are an integral part of the financial statements.


F - 6

MICEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In U.S. dollars                   

                         								      Year ended September 30,
                               								1998			              1997
								          	
Cash flows from operating activities:				
				
Net loss                       							(1,117,654)		         (209,026)
Adjustments to reconcile loss to net cash provided by
	(used in) operating activities:				
	Depreciation and amortization				    112,552			            84,468
	Equity in (income) losses of 
 affiliated company		                 24,041			             (19,245)
	Compensation from issuance of 
 options to consultants 	             135,000			             -
	Amortization of deferred compensation from
	issuance of stock options to 
 employees			                         186,670			             134,940
	Gain on sale of fixed assets		       (8,505)			             -
	Minority interest in losses of 
 subsidiary			                        (649,095)	            	-
	Shares issued for consulting fees				 -			                  6,250
	Provision for allowance for doubtful 
 accounts		                            -			                  12,000
				
	Changes in assets and liabilities:				
  Decrease (increase) in accounts 
   receivable	                         (389,821)		           805,827
		Decrease (increase) in inventories		 229,921			            (186,067)
		Decrease in accounts payable 
   and accrued liabilities	            (102,222)		           (510,616)
  Increase (decrease) in advances  
   from customers	                     (279,938)		           146,729
  Increase in accrued severance pay,net 24,502			             8,861
				
Net cash provided by (used in)
  operating activities		                (1,834,549)		         274,121
				
Cash flows from investing activities:				
				
Purchase of fixed assets					          (590,270)		            (85,537)
Proceeds from sale of fixed assets				 12,501			               -
Investment in affiliated company				   (50,000)			            (100,500)
				
Net cash used in investing activities		(627,769)		            (186,037)

F - 7

Cash flows from financing activities:				
				
Repayment of long-term debt					       $  (18,724)		          $ (109,737)
Net change in short-term bank 
 overdraft facilities		                222,098			             (313,436)
Proceeds from issuance of common 
 shares, net			                        300,000			              745,000
Receipts on account of shares				     	400,000		              	-
Issuance of subsidiary shares to a 
 third party			                        2,496,548		             -
				
Net cash provided by financing 
 activities			                         3,399,922		             321,827
				
Increase in cash and cash equivalents		937,604			              409,911
Cash and cash equivalents at the 
beginning of the year		                491,000			              81,089
				
Cash and cash equivalents at 
the end of the year			                 $ 1,428,604		           $ 491,000
				
Supplemental cash flow information				
				
Interest paid							                   $ 24,862			             $ 33,010
Supplemental disclosure of non-cash investing and financing activities				

Issuance of common stock in exchange for consulting 
services rendered to the Company.				  $-			                   $ 6,250


The accompanying notes are an integral part of the financial statements.

F - 8 


MICEL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1:	GENERAL

Micel Corp. ("the Parent") was incorporated on June 25, 1987 and 
operates in the United States of America and in Israel through its Israeli 
subsidiaries (collectively the "Company"). The principal business 
activities of the Company are the production, development and 
marketing of electronic equipment. The Company markets its products 
in the United States and in Israel.

Micel's subsidiaries:

a.	Microkim Ltd. ("Microkim")

Founded in 1972 in Israel, by M/A Comm, Microkim is dedicated to 
providing advanced products for a broad range of military and 
commercial applications. The Company is a leading supplier of 
portable field testers and simulators, RF and microwave systems, 
sub-systems and components for application in communication, 
electronic warfare, radar, test equipment, and simulators/Testers.
Microkim is 100% held by the parent.

b.	RadioTel Ltd. ("RadioTel")

RadioTel Ltd., was established in 1996 in Israel to develop a managed 
wireless Synchronous Digital Hierarchy (SDH) transmission network.

Through the use of novel techniques and state of the art technologies, 
the company's mission is to extend wideband wireline/fiber services 
into the wireless domain. These wireless networks are used to extend 
the existing and future infrastructure while at the same time supplying 
full transparency of all protocols with the same reliability and 
uninterrupted service of wireline services.

RadioTel is 51.5% held by the parent.

The financial statements of RadioTel are consolidated with the 
Company's financial statements.

c.	Micel Wireless Corp.

Micel Wireless Corp., a U.S. corporation located in Florida , is an 
international telecommunications company engaged in the sourcing, 
marketing and sales of wireless telephone terminals and other related 
products. Micel Wireless currently represents certain manufacturing 
companies and telecom agencies as a purchasing agent and sales 
representative.

Micel Wireless Corp. designs, manufactures, and sells fixed cellular 
terminals for wireless local loop ("WLL") applications in developing 
countries.

Micel Wireless is jointly held by the Parent and by Export Business & 
Services, Inc. ("EBS").
 
F - 9

NOTE 2:	SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the financial statements 
are as follows:

a.	Principles of consolidation:

The consolidated financial statements include the accounts of the 
parent and its subsidiaries and have been prepared in accordance with 
generally accepted accounting principles in the United States. 
Significant intercompany accounts and transactions have been 
eliminated on consolidation. The Company's 50% interest in Micel 
Wireless is accounted for by the equity method.


b.	Foreign currency transactions:

Most of Microkim's sales are either in, or, linked to the U.S. dollar. In 
addition, a substantial portion of the parent's costs are incurred in dollars.

Company's management believes that the dollar is a primary currency in 
the economic environment in which it operates, therefore the dollar is its 
functional currency, and, accordingly, monetary accounts maintained in 
currencies other than the dollar (principally cash and liabilities) are 
remeasured using the foreign exchange rate at the balance sheet date. 
Operational accounts and non-monetary balance sheet accounts are 
measured and recorded at the rate in effect at the date of the transaction. 
The effects of foreign currency remeasurement are reported in current 
operations.

c.	Use of estimates:

The preparation of the financial statements in conformity with generally 
accepted accounting principles requires management to make estimates 
and assumptions that affect the amounts reported in the financial 
statements and accompanying notes. Actual results could differ from 
those estimates.

d.	Cash and cash equivalents:

The Company considers all highly liquid investments, originally 
purchased with maturities of three months or less, to be cash equivalents. 

F - 10

e.	Inventories

Inventories are stated at the lower of cost or market value. Cost is 
determined as follows:

Raw materials: 		using the weighted average basis.
In Process Inventories: 	Raw materials and components - on the 
weighted average basis. 			Labor and 
overhead - on the basis of actual costs.

f.	Property, Plant and equipment:

Property, plant and equipment are stated at cost. Depreciation is 
calculated using the straight-line method, over the estimated useful lives 
of the assets as follows. 

                                						Years
		
Machinery and equipment			             5 - 6
Computers and related equipment		      3 - 5
Motor Vehicles				                     6
Office furniture and equipment			      6 - 14

Leashold improvements are amortized on the straight-line basis, over the 
shorter of either the estimated useful life or the lease term.

g.	Income taxes:

The Company accounts for income taxes in accordance with Statement 
of Financial Accounting Standards (SFAS) 109, Accounting for Income 
Taxes. This statement prescribes the use of the liability method whereby 
deferred tax asset and liability account balances are determined based on 
differences between financial reporting and tax bases of assets and 
liabilities and are measured using the enacted tax rates and laws that will 
be in effect when the differences are expected to reverse. The Company 
provides a valuation allowance, if necessary, to reduce deferred tax 
assets to their estimated realizable value.

F - 11

h.	Warranty Costs:

The provision for product warranties is recorded for probable costs, in 
connection with warranties based on the company's experience and 
Company's managers and engineering estimates.

The Company generally provides a warranty for parts and labor for one 
year from delivery of the product, although in some cases a longer 
warranty period may be given.

i.	Revenue recognition:

Revenues from sales of products are recognized upon delivery, provided 
that no significant vendor obligations remain and the collection of the 
related receivable is probable.


j.	Research and development costs:

	Research and development costs are charged to the statement of 
operations as incurred. Statement of Financial Accounting Standard 
("SFAS") No. 86 "Accounting for the Costs of Computer Software to be 
Sold, Leased or Otherwise Marketed", requires capitalization of certain 
software development costs subsequent to the establishment of 
technological feasibility with respect to software development.

k.	Royalty-bearing grants:

Royalty-bearing grants from the Government of Israel for funding of 
approved research projects are recognized at the time the Company is 
entitled to such grants on the basis of the related costs incurred.

l.	Basic and diluted net loss per share:

Basic net loss per share is computed based on the weighted average 
number of common share outstanding during each year. Diluted net loss 
per share is computed based on the weighted average number of common 
shares outstanding during each year, plus the dilutive potential of 
common shares considered outstanding during the year, in accordance 
with FASB Statement No. 128, "Earnings Per Share".

m.	Advertising expenses:

Advertising expenses are charged to the statement of operations as 
incurred. Advertising expenses for the years ending September 30, 1998 
and 1997, were not material.

n.	Concentration of credit risks:

Financial instruments that potentially subject the Company to 
concentrations of credit risks consist principally of cash equivalents and 
trade receivables. 

The Company's cash and cash equivalents are invested in deposits with 
major U.S and Israeli banks. Management believes that the financial 
institutions that hold the Company's investments are financially sound, 
and accordingly, minimal credit risks exist with respect to these 
investments.

The Company's accounts receivable are derived from sales to customers 
located primarily in Israel and the United States. The Company performs 
ongoing credit valuations of its customers and, to date, has not 
experienced major losses from bad debts.  In management's opinion, the 
allowance for doubtful accounts adequately covers anticipated losses in 
respect of its accounts receivable credit risks.

F - 12

o.	Fair value of financial instruments:

The financial instruments of the Company at September 30, 1998 and 
1997 consist of non-derivative financial instruments included in working 
capital: cash and cash equivalents, accounts receivable, loan to affiliated 
company, short-term bank credit, accounts payable and accruals and long 
term debt Due to the short-term maturities of these financial instruments, 
their fair value is usually equivalent to or approximately their carrying 
amount.

p.	Stock-based compensation:

The Company has elected to follow Accounting Principles Board 
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 
25"), in accounting for its employee stock options plan. Under APB 25 
when the exercise price  equals or is above the market price of the 
underlying stock on the date of grant, no compensation expense is 
recognized. 

In accounting for options granted to persons other than employees, the 
provisions of Statement No. 123, "Accounting for Stock Based 
Compensation" were applied. According to FASB 123 the fair value of 
these options was estimated at the grant date using Black-Scholes option 
pricing model.

The Company recorded an expense in accordance with APB 25 in the 
amount of $ 186,670 and $ 134,940 for the years ending September 30, 
1998 and 1997, respectively.

q.	Comprehensive Income

Comprehensive Income, is required to be adopted for fiscal years 
beginning on or after December 15, 1997. SFAS 130 establishes 
standards for the reporting and display of comprehensive income and its 
components in a full set of general purpose financial statements. 
Reclassification of financial statements for earlier periods presented is 
required. SFAS 130 does not currently apply to the Company as there are 
no items of comprehensive income in any period presented.

r.	Impact of recently issued accounting standards:

1.	In June 1997, the FASB issued Statement of Financial Accounting 
Standards No. 131 "Disclosure About Segments of an Enterprise and 
Related Information." This statement is effective for fiscal years 
beginning after December 15, 1997. This statement does not have a 
measurement effect on the financial statements. However, it does require 
additional disclosure.

F - 13

2.	In June 1998, the Financial Accounting Standards Board issued 
SFAS No. 133, 'Accounting for Derivative Instruments and Hedging 
Activities' ('SFAS No. 133'). This statement establishes accounting and 
reporting standards requiring that every derivative instrument (including 
certain derivative instruments embedded in other contracts) be recorded 
in the balance sheet as either an asset or liability measured at its fair 
value. The statement also requires that changes in the derivative's fair 
value be recognized currently in earnings unless specific hedge 
accounting criteria are met. Special accounting for qualifying hedges 
allows a derivative's gains and losses to offset related results on the 
hedged item in the item in the income statement, and requires that a 
company must formally document, designate, and assess the 
effectiveness of transactions that receive hedge accounting. SFAS No. 
133 is effective for fiscal years beginning after June 15, 1999 and cannot 
be applied retroactively.  The Company does not expect the impact of 
this new statement on the Company's consolidated balance sheets or 
results of operations to be material.


NOTE 3: -	INVENTORIES

Inventories consist of the following:

                         							September 30, 1998
							
	
Raw materials					              $  482,062
In-process inventories				      183,009
	
	                         						$ 665,071

In-process inventories include labor and overhead costs of approximately 
$ 56,000.

F - 14

NOTE 4: -	INVESTMENT IN AFFILIATED COMPANY

The company applies the equity method of accounting to its investment in Micel 
Wireless Corp.

According to the shareholders' agreement between EBS, the Company and Micel 
Wireless Corp., the Company granted a loan in the amount of $150,000 to Micel 
Wireless Corp., which bears interest at the rate of 12% per annum, payable 
annually. The loan will become due at a mutually agreed upon time between EBS 
and the Company.

                             										September 30,1998

Investment in capital								         $500
Loan (see above)								              150,000
Accumulated loss								              (4,796)

										
                            										$145,704



NOTE 5: 	PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following:

                             								September 30, 1998

Machinery and equipment					         $ 2,056,662
Computers and related equipment				  278,942
Motor Vehicles						                 133,994
Office furniture and equipment					  76,375
Leasehold improvements					          13,212		
								                             2,559,185
Less - accumulated depreciation				  (1,875,065)
	
	                             							$  684,120


Depreciation expenses amounted to $ 112,552 and $ 84,468 for the years ended 
September 30, 1998 and 1997, respectively.
 

F - 15

NOTE 6:-	SHORT-TERM BANK CREDIT

As of September 30, 1998, the Company has a line of credit in the amount of 
$ 234,000, denominated in NIS, which bears interest at an annual rate of 15%.

NOTE 7: 	LONG-TERM DEBT

As of September 30, 1998, long-term debt consists of the following:

             						                 Annual Interest Rate	  Principal Outstanding
				
Israel Industrial Development 
Bank Ltd.	                          	LIBOR +1.375%		        $ 23,004
Less - current maturities						                             15,500
				
				                                                   					$ 7,504

As of September 30, 1998, the LIBOR interest rate was 6%.
The obligation is secured by inventory and related equipment.

NOTE 8: -	ACCRUED SEVERANCE PAY, NET

Under Israeli Law, the Company's subsidiaries are required to make 
severance payments to dismissed employees (including officers) and to 
employees leaving employment under certain other circumstances. This 
liability is calculated based on the salary of each employee for the month 
prior to the balance sheet date multiplied by the periods of employment 
of each employee. Micel Corp.'s liability for required severance 
payments is covered by funding into approved severance pay funds, 
insurance policies and by an accrual. 

Severance pay expenses amounted to $ 67,790 and $ 38,140 for the years 
ended September 30, 1998, and 1997, respectively.

NOTE 9: -	TAXES ON INCOME 

a.	Domestic (U.S.A.):
As of September 30, 1998, the Company had approximately $ 1.4 million in 
federal and state net operating losses carryforward to offset against future 
taxable income. The net operating losses carryforward expire in the years 
2003 through 2018.

F -16

b.	Foreign (Israel - subsidiaries):

1.	Measurement of taxable income under the Income Tax (Inflationary 
Adjustments) Law, 1985:
	
	Under this law, taxable income is measured in real terms, in 
accordance with the changes in the Israeli CPI. The Company's Israeli 
subsidiaries elected to measure their results on the basis of changes in the 
Israeli CPI. The difference between the annual change in the Israeli CPI 
and in the NIS/dollar exchange rate causes a further difference between 
taxable income and the income before taxes shown in the financial 
statements. In accordance with paragraph 9(f) of SFAS No. 109, the 
Company has not provided deferred income taxes on the difference 
between the reporting currency and the tax bases of assets and liabilities.

2.	Tax benefits under the Law for the Encouragement of Capital 
Investments, 1959 (hereinafter - the "Law"):

	The production facilities and expansion programs of the subsidiaries 
in Israel have been granted the status of "approved enterprise", under the 
Law. According to the provisions of the Law, Microkim has elected to 
enjoy "alternative benefits" - waiver of grants in return for tax exemption 
- and, accordingly, Microkim's income is tax-exempt for a period of two 
years commencing with the year in which it first earns taxable income. In 
the remaining 8 years of benefits, it will be subject to a corporate tax of 
10% to 25%, depending upon the rate of investment of foreign investors.

If a dividend is distributed out of such tax-exempt profits, the subsidiaries 
will be liable for corporate tax at the rate of 15%.

The period of tax benefits, detailed above, is subject to limits of 12 years 
from the commencement of production, or 14 years from the approval date, 
whichever is earlier. 
The law also grants entitlement to claim accelerated depreciation on 
buildings, machinery and equipment used by the "approved enterprise", 
during the first five tax years.

Microkim has not yet commenced its benefits period, since it has not yet 
earned taxable income. The company can utilize the benefits period up to 
August 28, 2005.

Israeli taxable income not eligible for the "Approved Enterprise" benefits is 
taxed at the regular corporate tax rate of 36%.

3.	The subsidiaries has accumulated foreign net operating losses 
carryforward for tax purposes as of September 30, 1998, which may offset 
taxable income for an indefinite period in the amount of approximately $ 6.6 
million.

F - 17

c.	Final tax assessments:
Microkim has received final tax assessments up to and including the tax 
year ended September 30, 1995. RadioTel has not yet been assessed.

d.	Deferred tax assets:
	Deferred income taxes reflect the net tax effects of temporary 
differences between the carrying amounts of assets and liabilities for 
financial reporting purposes and the amounts used for income tax 
purposes.
									
                     										                       September 30,1998

	Various accrued liabilities							                   $ 233,600
	Net operating loss carryforward						                2,824,980

                                            										3,058,580
	Valuation allowance							                           3,058,580

	Net deferred tax asset							                        $  	-        


	The Company has valuation allowances against the full amount of the 
tax benefits in the accompanying consolidated financial statements due to its 
history of operating losses and the uncertainty as to when these benefits will 
be utilized. Management currently believes that it is more likely than not that 
the deferred tax regarding the loss carryforwards and other temporary 
differences will not be realized.


e.	Income tax reconciliation:

	A reconciliation of the theoretical tax expense, assuming all income is 
taxed at the statutory rate applicable to income of the Company, and the 
actual tax expense are as follows:



                                    								         Year ended September 30,
                                            								 1998		         1997

Theoretical tax (benefit) computed at the
statutory rate of 35%						                          $   (609,948)	$  (79,894)	

Increase (decrease) in income taxes resulting from:		
Non-deductible expenses					                         21,398		      26,422

Losses for which benefits are not recognized			      588,550		     53,472

Income tax expense						                             $    -		      $    -

F - 18

f.	Loss before taxes on income consists of the following:


Domestic							                                     $ (156,522)	    $ (66,901)	
Foreign							                                      $ (1,586,186)	  $ (161,370)	
								                                            $ (1,742,708)	  $ (228,271)	



NOTE 10: -	COMMITMENTS AND CONTINGENCIES

a.	Lease commitment

Microkim has entered into an operating lease agreement for the space it 
occupies, which expires in December 2002. The rental payments through the 
lease expiration date in 2002 (which are linked to the CPI) approximate 
$ 8,750 per month. Rent expense for the years ended September 30, 1998 and 
1997 was approximately $ 90,000 and $ 63,000, respectively.
RadioTel entered into a two and a half year operating lease agreement 
beginning October 1997 for the space it occupies. The rental payments 
through the lease expiration date (which are linked to the Israeli CPI) 
approximate $4,800 per month. Rent expense for the years ended September 
30, 1998 and 1997 was approximately $74,000 and $9,300 respectively.

Future minimum rental payments under non-cancelable leases at September 
30, 1998, are as follows:

1999 	 $ 162,000
2000 	 $ 138,600
2001 	 $ 105,000
2002   $ 105,000

       $ 511,200

In fiscal year 1996, Microkim reached an agreement with its lessor to repay 
approximately $110,000 in back rent in monthly payments through April 1, 
1999. In January 1997, the Company reached a final settlement with its 
lessor whereby the Company paid $50,000 as full payment of the remaining 
obligation of $75,292.

F - 19

b.	Royalty commitment:

Microkim is committed to pay royalties to the Government of Israel and the 
BIRD Foundation in respect of products under development for which they 
participated by way of grant. The royalty is computed at the rate of 2% to 
5% of proceeds from sales of such products, up to 100%-150% of the 
aggregate amount of such grants ($ 1,114,000 as of September 30, 1998) 
Royalties paid during the years ended September 30, 1998 and 1997 totaled 
$ 23,223 and $12,517, respectively.

As security for compliance with the terms of an investment grant received 
from the State of Israel, Microkim registered floating security interests on 
all of its assets.

c.	Bank guarantees:

In connection with certain contracts entered into with customers, Microkim 
is required to obtain performance guarantees. The total performance 
guarantees outstanding at September 30, 1998 amounted approximately $ 
94,500.

d.	Consulting agreement

In August 1997, RadioTel contracted the services of Crossways Consulting 
Group Inc. ("CCG") for a period of 40 months beginning September 1, 1997. 
CCG will assist the Company with marketing strategies, by obtaining equity 
investments and project financing and by introducing RadioTel to potential 
customers, partners for mergers or acquisitions and strategic alliances.

e.	Legal proceedings:

In July 1994, the Company commenced a civil action in Israel in the 
approximate amount of $3,000,000 against the former owner of Microkim 
and the former president for false representations made by them in 
connection with the purchase of Microkim and for damages resulting from 
such misrepresentations. 

On September 8 1998, the lawsuit proceedings were rescinded.

F - 20

NOTE 11: -	SHAREHOLDERS' EQUITY

a.	Common stock:

During fiscal year 1998 and 1997, the Company issued $ 150,000 and $ 
372,500 shares of common stock at $2.00 per share, in private placements, 
respectively.

In addition, during fiscal year 1997, the Company issued 12,500 shares of 
common stock at $ 0.50 per share in exchange for consulting services 
rendered to the Company.

b.	Receipts on account of shares.

During fiscal year 1998, the Company raised $400,000 on account of 
common stock in a private placement.

c.	Issuance of subsidiary shares to a third party:

During fiscal year 1997, RadioTel issued 239,130 shares of common stock 
to the Parent and 252,141 shares of preferred stock to other investors in 
consideration of approximately $ 3,750,000.
As a result, the Parent recorded a liability the aggregate amount of $ 
1,159,222.

d.	Stock option plan:

1.	The Parent stock option plan:

In November 1990, the Company's Board of Directors (the "Board") 
adopted, along with its shareholders' approval, the 1990 Stock Option Plan 
(the "Plan"), as amended through November 1996, which provides for the 
grant of incentive and/or nonqualified stock options to purchase up to 
800,000 shares of common stock to any officer, director, consultant or 
employee at the Board's discretion. Generally, these options become 
exercisable over specified vesting periods but may not be exercised after ten 
years from the date of grant. The exercise price of the qualified options 
cannot be less than the fair market value of the Company's common stock at 
the time of grant.


F - 21

The following is a summary of the options granted under the plan:

									
                              							       Year ended September 30,
						                                 1998			      	           1997
     						                                	Weighted			                Weighted
                                     							Average				                Average
                                     							Exercise				               Exercise
	                                Shares		   Price		         Shares		   Price


Outstanding at beginning of year	546,620		 $  1.51		        564,120		 $  1.48	
Granted				                      100,000		 $ 2.00		           -		        -
Exercised				                     -				                       -
Forfeited				                    19,500		  0.60		           17,500		   0.60

Outstanding at end of year		     627,120		 1.61		           546,620		  1.51

Contractual Life					                      3.45				                    3.54

Exercisable at the end of year		435,483		  1.53		           210,465		  1.21




2.	RadioTel's stock option plan

	In July 1997, RadioTel's Board of Directors ("RadioTel's Board") 
adopted, along with its shareholders' approval, the key employee share 
incentive plan, 1997 ("RadioTel's Plan"), as amended through September 
1997, which provides for the grant of incentive and/or nonqualified stock 
options to purchase up to 162,500 shares of common stock to any officer, 
director, consultant or employee at RadioTel's Board's discretion.
Generally, these options become exercisable over specified vesting periods 
but may not be exercised after ten years (or any shorter period as set forth 
in the notice of grant) from the date of grant. The exercise price of the 
qualified options cannot be less than the par value of the shares into which 
such options are exercisable.

Under FAS 123 pro forma information regarding net income and earnings 
per share is required (for grants issued after December 1995), and has been 
determined as if the Company had accounted for its employee stock option 
under the fair value method of the statement. The fair value for these 
options was estimated at the date of grant using a Black-Scholes option 
pricing model with the following weighted-average assumptions for 1998: 
risk-free interest rate of 5.6%, dividend yields of 0%, volatility factors of 
the expected market price of the Company's common stock shares of 
63.6% and a weighted-average expected life of the options of five years.

F -22

The Black-Scholes option pricing model was developed for use in 
estimating the fair value of traded options that have no vesting restrictions 
and are fully transferable. In addition, option valuation models require the 
input of highly subjective assumptions, including the expected stock price 
volatility. Because the Company's employee stock options have 
characteristics significantly different from those traded options, and 
because changes in the subject input assumptions can materially affect the 
fair value estimate, in management's opinion, the existing models do not 
necessarily provide a reliable single measure of the fair value of its 
employee stock options.

For purposes of pro forma disclosure, the estimated fair value of the options 
is amortized to expense over the options' vesting period. Because Statement 
123 is applicable only to options granted subsequent to December 31, 1995, 
its pro forma effect will not be fully reflected until 2000.




                                        Year ended September 30,
                                     1998                     1997
Net loss as reported                $ (1,117,654)         $ (209,026)
Pro forma net loss for SFAS123      $ (1,303,052)         $ (345,061)
Pro forma basic net loss per share 
for SFAS 123                           (0.22)                (0.06)

e.	Warrants:

1.	In November 1994, the shareholders approved the issuance of a warrant 
to Quest (a related party, see Note 13) to purchase 61,437 shares of common 
stock at $.60 per share.

2.	In August 1996, the Company issued options to consultants to purchase 
170,000 shares of common stock at $ 2.00 per share. The Company recorded 
an expense in accordance with FASB 123, in the amount of $ 135,000.

F - 23

NOTE 12: -	SELECTED STATEMENTS OF OPERATIONS DATA

Summary of operations within geographical areas:



                                       Year ended September 30,

                                       1998                  1997
Sales to unaffiliated customers:

North America                          $ 1,049,089          $ 2,383,086
Israel                                 1,691,387            1,337,674

                                       $ 2,740,476          $ 3,720,760

Operating loss:

North America                         $ 174,094             $ 92,244
Israel                                1,565,267             78,896

                                      $ 1,739,361           $ 171,140

                                      September 30,1998
Identifiable assets:

North America                         $ 196,396
Israel                                3,989,111

                                      $ 4,185,507


NOTE 13:-	RELATED PARTY TRANSACTIONS

a.	In fiscal 1997, in connection with a series of private placements, the 
Company issued 100,000 shares of common stock to a director and principal 
shareholder at $ 2.00 per share.

b.	During January 1993, the Company contracted the services of Quest 
Enterprises Inc. ("Quest"), a marketing specialist, for a period of three years.
The term of the agreement has been extended through December 31, 1998. 
Quest is 50% owned by the Company's former chairman. In August 1994, the 
agreement between the Company and Quest was amended to provide that Quest 
will assist the Company with the operation and management of Microkim. The 
Company pays Quest a consulting fee of $ 5,000 per month plus expenses.

F - 24

In addition, in the event that the services provided by Quest to the Company 
result in a contract being awarded to the Company, Quest will be entitled to a 
commission in the amount of 1% of the revenues received. In the event that the
services provided by Quest result in a joint venture or other equity arrangement
between the Company and the potential partner, Quest will be entitled to a 
reasonable equity position in such joint venture not to exceed 15% of the equity
of the joint venture or a commission. Quest is also entitled to 25% of any 
royalties received by the Company from parties introduced to the Company by 
Quest.

Consulting fees paid for the year ended September 30, 1998 and 1997 
amounted to $ 83,114 and $ 83,742, respectively.


NOTE 14:-	SUBSEQUENT EVENTS

On December 30, 1998, the Company contracted the services of 
Crossways Consulting Group Inc. ("CCG"), for a period of four years 
beginning January 1, 1999. CCG will assist the Company with marketing 
strategies, by conducting Microkim's operations, and by introducing Micel 
to potential customers.

The Company pays CCG consulting fees in the amount of $ 6,000 per 
month. In addition, the Company will pay CCG 15% on the sales of its 
products or services to customers in North America that are provided by 
CCG during the term of the agreement and 18 months after the effective 
termination date of the agreement.

CCG granted 220,000 options of the Company, at the price of $ 2.00 each, 
exercisable for a period of five years after the termination of the 
agreement, and vesting at the rate of 25%, commencing January 1, 1999.

F - 25

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.
 
 
 Dated: January  13 , 1999
 
                                    				 MICEL CORP.
                                
         	             				          By:                                        
                                        	Ron Levy, President
 
 
Pursuant to the Requirement of the Securities Exchange Act of 1934, this report 
has been signed below by the following persons on behalf of the Registrant and 
in the capacities and dates indicated.
 
 
 
 SIGNATURE						                         TITLE		
						                              	DATE

 
 
Ron Levy
Ron Levy                            				Director, President and Chief 
                                        Executive and Financial Officer	
							                         
                                        January  13 , 1999


                                
 Heather Loren                       				Director
 Heather Loren 	  				                  
                                         January  13 , 1999
 

    
 
 Barry Braunstein           				         Director
 Barry Braunstein  					
                                         January  13 , 1999
 
 


F - 26

10.12- Agreement between the Company and Crossways Consulting Group, Inc.:

AGREEMENT FOR SERVICES

In consideration of the mutual promises and covenants herein, it is hereby 
agreed by Micel, Corp., 445 Central Ave. Cedarhurst, NY 11516 [hereinafter 
referred to as "Micel"], and Crossways Consulting Group Inc.,  136 Washington 
Spring Road, palisades, NY 10964 [hereinafter referred to as "CCG"], that 
CCG will perform the following projects and/or services for Micel 
[hereinafter referred to as 'Services']:

1. Support the management of Micel in developing and executing its marketing 
strategy.
2. Assist Micel in conducting its Microkim operations.
3. Assist in developing Micel strategic plans.
4. Introduce Micel to potential customers /teammates.
5. Assist Micel in identifying potential partners for mergers, acquisitions and 
strategic alliances.
6. Assist Micel in conducting investor relationship activities.

1. CCG shall perform such services as an independent contractor and not as an 
employee of Micel. As such, CCG shall not be entitled to or claim any benefits 
or right accorded to the employees of Micel.

2. Performance of the Services will be paid for in the following manner:

a. Micel shall pay CCG a monthly fee of $6,000 per month. CCG shall invoice 
Micel each month for the time expended during the preceding month.

b. Micel shall pay CCG 1.5% sales of its products or services to customers in 
North America. CCG will be entitled to this fee for any sales closed during the 
term of this Agreement and during a period of 18 months 
after the effective termination date of this Agreement, provided that the
introduction or sale of such customers took place prior to termination.

c. CCG is hereby granted 220,000 options of Micel Corp. at $2.00 which is the 
market price, exercisable for a period of 5 years after the termination of 
this Agreement and vesting at the rate of 20% starting January 1, 1999, 
January 1, 2000, January 1, 2001, January 2002 and December 31, 2002. 
The option will have piggy back registration rights, unless the 
underwriter of proposed offering for which registration is being made does not 
allow such piggy back registration.   

3. Performance of Services under this agreement shall commence on January 1, 
1999 and continue until December 31, 2002. Thereafter 
Services will be continued on a month to month basis. However, Micel or CCG may 
terminate this agreement at anytime in accordance with the terms of Paragraph 7 
hereof.

4. REIMBURSABLE EXPENSES 

Expenses incurred by CCG or arising out of the Services to be performed 
hereunder shall be reimbursed, but only to the extent as expressly provided 
herein. 
Micel shall reimburse CCG for travel and miscellaneous business 
expenses to the extent same shall be incurred by CCG in connection 
with providing Services under this Agreement. 
Expenses shall be reimbursed by Micel in accordance with the same rules and 
procedures by which Micel reimburse its own employees.
Reimbursable expenses shall be invoiced by CCG at the same time it shall invoice
Micel for the work and services performed under this agreement. Reimbursable 
expense invoices shall be accompanied by such documentation as shall be 
reasonably necessary to verify the amount claimed.

5. PROPRIETARY INFORMATION

Any information obtained by either party in the course of performing this 
Agreement including, but not limited to, information, which is of proprietary 
nature and is not publicly available, shall be kept confidential and not 
released by such party without the authorization of the other party.
Both Micel and CCG shall use their best efforts not to divulge, in whole 
or in part, such propriety information to any third party without 
receiving a written consent from the party disclosing the information.
The party receiving the proprietary information agrees to handle 
such proprietary information with the same degree of care it uses to handle 
such proprietary information, but in no event with less than reasonable care.

6. CONFLICTS OF INTEREST

It is hereby acknowledge and agreed by Micel that CCG is providing consulting 
services to the entities listed in Attachment 1.   

7. TERMINATION

Furnishing of Services under this Agreement may be terminated by either party 
upon sixty days prior written notice. Notwithstanding termination of 
the Agreement, the right of CCG to compensation in accordance with 
Paragraphs 2b and 2c will survive.

8. INDEMNIFICTION

Micel will indemnify CCG, its officers and employees and hole 
them harmless in connection with their activities pursuant to this Agreement.

9. SURVIVABILITY

If any provision of this Agreement is found to be void, the remainder of the 
Agreement shall remain in full force and shall not thereby be terminated.

10. APPLICABLE LAW

This Agreement shall be interpreted and governed by the laws of the State of New
York. Any dispute arising out or relating to this agreement which can not be 
resolved amicable, shall be determined by binding arbitration 
conducted by the American Arbitration Association in New York.

11. ENTIRE AGREEMENT

This document contains the entire agreement of the parties hereto, and no
modifications thereto shall be binding upon the parties hereto 
unless the modification is in writing and signed by both parties.

Micel Corp.			                        Crossways Consulting Group Inc.

By:       Rony Levy		                 By: Tuvia Barak

Title: President and CEO	             Title: President
Date: Dec 30, 1998             	      Date: Dec 30, 1998