SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended June 30, 1998

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ________________ to _________________.

Commission file number 0-9040

                                 METRO-TEL CORP.
                 (Name of small business issuer in its charter)

                     Delaware                             11-2014231
       ----------------------------------              ------------------
       (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                Identification No.)

    250 South Milpitas Boulevard, Milpitas, CA                95035
    ------------------------------------------                -----
     (Address of principal executive offices)               (Zip Code)

Issuer's telephone number, including area code:     408-946-4600

Securities registered under Section 12(b) of the Exchange Act:  None

Securities  registered  under Section  12(g) of the Exchange Act:  Common Stock,
$.025 par value

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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[ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will 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]

         State issuer's revenues for its most recent fiscal year:  $3,893,077

         The aggregate market value as at September 15, 1998 of the Common Stock
of the  issuer,  its only  class of voting  stock,  held by  non-affiliates  was
approximately  $1,739,000  calculated  on the basis of the closing price of such
stock on the National  Association  of Securities  Dealers  Automated  Quotation
System on that date.  Such market value  excludes  shares owned by all executive
officers and directors (but includes shares owned by their spouses); this should
not be construed as indicating that all such persons are affiliates.

         The number of shares  outstanding  of the  issuer's  Common Stock as at
September 15, 1998 was 2,054,046.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the issuer's Proxy Statement  relating to its 1998 Annual Meeting of
Stockholders  are incorporated by reference into Items 10, 11 and 12 in Part III
of this Report.

Transitional Small Business Disclosure Format   Yes[ ]  No[X]

<PAGE>

                                     PART I
                                     ------

Item 1.    Business.
------     --------

General

           The Company was incorporated  under the laws of the State of Delaware
on June 30,  1963.  Its  executive  offices  are  located at 250 South  Milpitas
Boulevard, Milpitas, California 95035, and its telephone number is 408-946-4600.
Since its inception, the Company has been engaged in the manufacture and sale of
telephone  test  and  customer  premise  equipment  utilized  by  telephone  and
telephone   interconnect  companies  in  the  installation  and  maintenance  of
telephone  equipment.  Through  internal  research and  development  and through
acquisition,  the Company has added various  product lines to its telephone test
and customer premise product lines.

Proposed Merger

           On July 6, 1998, the Company and Steiner-Atlantic  Corp.  ("Steiner")
signed a Merger  Agreement  pursuant to which a wholly owned  subsidiary  of the
Company  would be merged  with and into  Steiner  (the  "Merger").  Steiner is a
privately  held  Florida  corporation  which  is  a  supplier  of  dry  cleaning
equipment, industrial laundry equipment and steam boilers.

           If the  Merger is  consummated,  each share of the  Company's  Common
Stock   outstanding  prior  to  the  consummation  of  the  Merger  will  remain
outstanding  following the  consummation of the merger.  Each share of Steiner's
Common  Stock  outstanding  prior  to the  consummation  of the  Merger  will be
converted  into  13.90561  shares  of  the  Company's  Common  Stock.  Steiner's
shareholders  may also receive  additional  shares of the Company's Common Stock
depending on the number of shares of the Company's Common Stock to be subject to
options to be granted to key employees of Steiner on the date of consummation of
the Merger.  Assuming no such additional shares are issued, upon consummation of
the Merger,  the holders of the Company's Common Stock  immediately prior to the
Merger would own 2,054,046, or approximately 30%, of the shares of the Company's
Common Stock to be outstanding  immediately following the Merger and the holders
of Steiner's Common Stock  immediately  prior to the Merger would own 4,720,954,
or  approximately  69%,  of the  shares  of the  Company's  Common  Stock  to be
outstanding  immediately  following the Merger.  The remaining 100,000 shares of
the Company's  Common Stock to be outstanding  immediately  following the Merger
would be owned by the  Compny's  financial  advisers in the  transaction,  which
would be receiving  such shares as  compensation  for its services in connection
with the proposed Merger.

           In  addition,  if the Merger is  consummated,  one of  Steiner's  two
shareholders  will become  Chairman of the Board of Directors of each of Steiner
and the Company,  the other  Steiner  shareholder  will become the President and
Chief  Executive  Officer  of each of Steiner  and the  Company,  and  Steiner's
shareholders  will  designate four of the six members of the Boards of Directors
of each of the Company and Steiner.

                                       -2-

<PAGE>



           The Company's  Board of Directors  has approved the Merger  Agreement
and recommended  that it be approved and adopted by the Company's  stockholders.
It is expected that the Merger will be voted upon by the Company's  stockholders
at the Company's 1998 Annual Meeting of Stockholders, together with proposals to
increase the number of authorized  shares of the  Company's  Common Stock and to
approve an amendment to the  Company's  stock option plan to increase the number
of shares of the Company's Common Stock subject thereto, the approval of each of
which proposals is a condition to the completion of the Merger.

Product Lines

           The following  table sets forth the  approximate net sales of each of
the Company's two products  lines and of its other  products and services,  as a
group, and the percentages  which such sales bear to total net sales during each
of the three years ended June 30, 1998:


                                  Year Ended June 30,
                  ----------------------------------------------

                           1998                          1997   
                           ----                          ----
                          Amount       %                Amount          %
                          ------      --                ------         --
                                     (dollars in thousands)
Telephone Test
Equipment                $3,582        93%               $3,602        93%

Customer Premise
Equipment                    83         2%                  121         3%

Other Products and
Services                    174         5%                  160         4%
                         ------       ---                ------       ---
                         $3,839       100%               $3,883       100%

         The  downsizing  of the Regional  Bell  Operating  Companies  ("RBOCs")
during the past several years has reduced the number of Telecom craft  personnel
who are potential  users of the Company's test equipment and,  accordingly,  the
Company's  sales.  To reduce the  impact  that has  occurred  as a result of the
downsizing of the RBOCs, through research and development, the Company has begun
introducing  new products  aimed at reducing its  dependence on the RBOCs and is
entering into new markets, principally the public utility and data industry, for
its existing and new products.

         Telephone Test Equipment.  The Company manufactures and sells a line of
telephone test equipment which includes portable test sets that are designed for
use in locating  high  resistance  faults  resulting  from  moisture in exchange
cables and by cable splicers on exchange and toll cables for  identification  of
cable wires and other tone-testing purposes;  linemen's rotary and/or touch-tone
testing  handsets and portable  line test sets for use by telephone  installers,
repairmen and central office  personnel;  hand and pole exploring coils that are
used  in  cable  fault  finding;   solid  state   conversion   amplifier   kits;
Volt-Ohmmeter test sets; and Cable Hound(R), a portable electronic unit

                                       -3-

<PAGE>



that  locates  and  determines  the depth of  underground  cable and metal pipes
primarily for the telephone, utility and construction industries.

         In  addition,  the Company  manufactures  a line of  transmission  test
equipment used in telephone  company central office  installations  by operating
companies,  long distance telephone  resellers and large companies who own their
own  networks.  Among these  products are digital and analog  rack-mounted  test
systems,  portable  transmission  test sets, remote test systems and fiber optic
test sets.

         Customer Premise Equipment. The Company manufactures and markets a line
of  telephone  station  and  peripheral   products,   including  telephone  call
sequencers (which answer calls on up to 12 incoming  unattended  lines,  provide
the  caller  with an  appropriate  message  and place  the calls in queue  until
answered by an attendant) and a line of digital announcers (which provide a pre-
programmed message with the ability to ring through at the end of the message if
so desired by the caller). This product line also includes a series of specialty
telephone products,  including call diverters (call forwarding devices used both
by end-users and in telephone company central offices), speed dialers, specialty
telephones and amplified handsets for the hearing impaired.

         In  addition,  the  Company  has begun  distributing  a line of Channel
Service Units/Data Service Units (CSU/DSU) for the data industry.  These devices
are used to  terminate a digital  channel on a  customer's  premises  and enable
computer data to be  transmitted  and received at high speeds over the telephone
line without the use of a modem.

         Other Products and Services.  In addition,  the Company sells a variety
of accessory products, primarily head sets and alligator clips. The Company also
sells spare parts for its product  lines and  provides  repair  services for its
products.

Methods of Distribution

         The Company presently sells its products through its own regional sales
managers and sales  representatives  who assist the Company's national telephone
equipment  distributors.  Sales  managers  are  presently  based in Georgia  and
Colorado.  In addition,  the Company  maintains  an in-house  sales staff at its
facilities in Milpitas, California.

Competition

         Competition  is high  with  respect  to each of the  Company's  product
lines.  However,  as the products contained in such lines are varied and similar
products  contain  varying  features,   neither  the  Company  nor  any  of  its
competitors  is a  dominant  factor  in any  product  line  market,  except  for
linemen's  test sets for which  Dracon,  a division  of Harris  Corporation,  is
dominant.

         The principal method of competition for each of the Company's  products
is price and product  features,  with service and  warranty  having a relatively
less   significant   impact.   The  Company   believes  its  product  lines  are
competitively priced. Many of the Company's competitors have greater

                                       -4-

<PAGE>

financial  resources  and have  more  extensive  research  and  development  and
marketing staffs than the Company.

Raw Materials

         The basic materials used in the manufacture of the Company's  telephone
test equipment and telephone station and peripheral  telephone equipment consist
of  electronic  components.  The  Company  utilizes  many  suppliers  and is not
dependent on any  supplier.  Its raw materials  generally are readily  available
from numerous suppliers.

Patents and Trademarks

         The  Company  has  obtained  a number  of  patents  and has a number of
trademarks  which are used to identify its product lines. No patent or trademark
is considered to be material to the Company's  overall  operations.  The Company
also pays royalties to third parties under  arrangements  permitting the Company
to manufacture various items in its product lines.

Principal Customers

         The Company is not dependent upon any single customer.  However,  North
Supply  Company,  a national  distributor of telephone  products,  accounted for
approximately  19% and 15% of the  Company's  net sales for the years ended June
30, 1997 and 1998,  respectively.  The Company believes that,  should it for any
reason lose this distributor,  the Company would not be adversely impacted since
these sales would be absorbed by other distributors.

Research and Development

         The  Company is  regularly  engaged in the design of new  products  and
improvement  of  existing  products  for all of its  product  lines.  The amount
specifically allocated to research and development activities in fiscal 1997 and
1998,  principally  salaries,  was  $238,061  and  $228,755,  respectively.  All
research and development is Company-sponsored,  except for products designed for
the  Company by  unaffiliated  third  parties  compensated  by either a lump-sum
payment or on a royalty basis.

         The  Company  intends to  continue  its policy of  reviewing  potential
acquisitions of new product lines,  additional products for its existing product
lines and the enhancement of its production and distribution capabilities.  Such
acquisitions  could lead to the  issuance of notes,  use of the general  working
capital of the Company and/or issuance of shares of the Company's capital stock.

Compliance with Environmental and Other Governmental Laws and Regulations

         Certain of the  Company's  customer  premise  equipment  products  that
connect to public telephone networks need Federal Communications Commission (or,
in the case of foreign sales,  the equivalent  agency in the foreign  country in
which they will be sold)  approval  prior to their sale.  The  Company  does not
believe that compliance with Federal, state and local environmental and other

                                       -5-

<PAGE>


laws and regulations  which have been adopted have had, or will have, a material
effect on its capital expenditures, earnings or competitive position.

Employees

         As of August 31,  1998,  the  Company had in its employ 31 persons on a
full-time basis. Of these, 19 were engaged in production, 3 in engineering, 5 in
sales and 4 in administration.

Foreign and Government Sales

         Export  sales were  approximately  $252,000 and $189,000 in fiscal 1997
and 1998,  respectively.  Such  export  sales were made  principally  to Europe,
Canada  and  South  America.  Most  export  sales  are  made  primarily  through
distributors  and agents.  Foreign  sales are  affected  by the  strength of the
United States dollar.  Revenues from sales to the United States government (none
of the contracts  relating  thereto being subject to renegotiation of profits or
termination at the election of the government) are immaterial.

Item 2.           Properties.
------            ----------

                  The  Company's  manufacturing   operations  are  conducted  in
approximately  21,500  square  feet of  space  in  Milpitas,  California  (which
includes warehouse and  administrative  facilities and which, since September 1,
1996, has also housed the Company's  executive  offices ) under a lease expiring
on March 31, 1999. The Company believes its facilities,  including machinery and
equipment,  are suitable and  adequate for its present  operations.  The Company
does not  anticipate  unusual  capital  expenditures  due to  aging,  repair  or
replacement of machinery and equipment.

Item 3.           Legal Proceedings.
                  -----------------

                  Not applicable.

Item 4.           Submission of Matters to a Vote of Security Holders.
------            ---------------------------------------------------

                  Not applicable.

                                       -6-

<PAGE>


                                     PART II

Item 5.           Market for the Common Equity and Related Stockholder Matters.
------            ------------------------------------------------------------
         

                  The Company's  Common Stock is traded in the  over-the-counter
market  and is quoted on the Nasdaq  Stock  Market-Small  Cap  Market  under the
symbol MTRO. The following  table sets forth the high and low bid prices for the
Company's  Common Stock for each quarterly  period during fiscal 1998 and fiscal
1997,  as  reported  by Nasdaq.  The  quotations  are  without  retail  markups,
markdowns or commissions and may not represent actual transactions.

                                               High            Low
                                               ----            ---
                    Fiscal 1997
                    -----------

                    First Quarter              1 1/4           1
                    Second Quarter             1 1/4           1
                    Third Quarter              1 1/4           1 1/16
                    Fourth Quarter             1 1/8              5/8


                    Fiscal 1998
                    -----------

                    First Quarter              1 3/8           11/16
                    Second Quarter             1 1/2           7/8
                    Third Quarter              1 3/8           5/8
                    Fourth Quarter             1 3/4           25/32

                    The Company has been advised by the Staff of Nasdaq that the
Staff  considers  the  Merger to be a reverse  acquisition  and that,  since the
combined  entity  is not  expected  to meet all of the  criteria  that  would be
applicable to gain an initial listing on the Nasdaq SmallCap Market, the Company
will be  delisted  from the Nasdaq  SmallCap  Market  effective  on the date the
Merger is consummated.  At that time the Company  expects that price  quotations
for its Common Stock will become available through Nasdaq's  Electronic Bulletin
Board.

                  No  dividends  have been paid on the  Company's  Common  Stock
during either of the last two fiscal years.

                  As of September 15, 1998 there were  approximately 966 holders
of record of the Company's Common Stock.

                                       -7-

<PAGE>


Item 6.           Management's Discussion and Analysis.
------            ------------------------------------

                  The  following  discussion  and  analysis  should  be  read in
conjunction with the financial  statements and notes thereto contained elsewhere
in this report.

Results of Operations

                  Net sales were  $43,741  (1.1%) lower in fiscal year 1998 than
in fiscal 1997. Reference is made to the table for information  concerning sales
by product lines of the Company during the two-year  period ended June 30, 1998.
Sales of telephone test equipment decreased by $19,934 (.6%) in fiscal 1998 from
fiscal  1997,  mostly due to a decrease of 42.6% in sales of  transmission  test
equipment,  which offset  increases of 6.2% in outside plant test sets and 10.3%
in installer's  test sets. The increases in outside plant and  installer's  test
sets were mainly  attributable  to the  introduction  and sale of new  products,
while the decrease in  transmission  test equipment sales was due to the effects
of a mature  product  line.  Sales of customer  premise  equipment  decreased by
$37,603  (31.1%) in fiscal  1998 over fiscal  1997,  mainly due to a decrease in
dialer  sales of 63.1% which  offset an increase  in call  handling  products of
87.5%.  The  increase  in call  handling  products  was due to newly  introduced
products,  while the  decrease in dialer sales was  attributable  to the reduced
demand for dialers in the domestic market.  Sales of miscellaneous  products and
services  increased by $13,796 (8.6%) in fiscal 1998 over fiscal 1997 due mainly
to increased sales of spare parts and repairs. The Company implemented selective
price increases during the third quarter of fiscal 1998; however, because of the
limited  portion of the year in which the new prices  were in effect,  the price
increases had minimal impact on reported sales.

         The Company's gross profit margin,  expressed as a percentage of sales,
decreased to 33.0% in fiscal 1998 from 37.8% in fiscal 1997, mainly due to a one
time-write off of $105,917 for obsolete and discontinued inventory. In addition,
overhead  expenses  increased  by 9.1% due to  increases  in  salaries,  payroll
expenses and depreciation which offset decreases in supplies, factory travel and
freight expenses.

         Selling,  general and administrative  expenses increased in fiscal 1998
by $37,251  (3.1%)  and as a  percentage  of sales to 32.5% in fiscal  1998 from
31.2% in fiscal  1997.  This  increase  was mainly due to an  increase  in sales
expense  (9.4%) which  results  from  increases in  commissions,  royalties  and
salaries  which  offset  a  reduction  in  travel  and  entertainment  expenses.
Increased  sales expenses also offset a reduction in general and  administrative
expenses  of 2.3%,  which was due to  reductions  in most  accounts  except  for
professional fees connected with the hiring of an investment banking firm.

         A reserve of $300,000  was  established  in fiscal  1998 for  estimated
professional  fees in  connection  with the  proposed  merger  pursuant to which
Steiner-Atlantic Corp. ("Steiner") would become a wholly-owned subsidiary of the
Company, with approximately 69% of the Company's

                                       -8-

<PAGE>



shares of Common Stock to be outstanding immediately following the merger, to be
owned by the two shareholders of Steiner (the "Merger").

         Research and  development  expenses  were $9,306 (3.9%) lower in fiscal
1998 than in fiscal 1997, mainly due to lower salary expenses, payroll costs and
supplies.

         Royalties,  interest  and other income  increased by $3,927  (62.8%) in
fiscal 1998 from fiscal 1997, mostly due to increased cash balances invested for
most of fiscal 1998.

         The  provision  for income taxes was a credit of $150,000 or 30% of the
pre-tax  loss in fiscal  1998  compared  to a charge of  $13,000 or 51.7% of the
pre-tax  profit in fiscal 1997.  The credit in fiscal 1998 was below the Federal
statutory  rate of 34% primarily as a result of the net operating loss carryback
created in fiscal 1998 and good will amortization,  offset by State income taxes
incurred  despite the  Company's  loss.  The provision in fiscal 1997 was higher
than Federal  statutory  rate of 34% due to State income  taxes,  non-deductible
charges to earnings, principally goodwill, and other rate adjustments.

Financial Condition

                  During the year ended June 30, 1998, cash and cash equivalents
decreased by $23,107 to $475,508.  Cash  provided by  operating  activities  was
$56,986 despite a loss for financial  reporting purposes of $349,670.  Such loss
included non-cash charges of $74,012 for depreciation and amortization, $105,917
for a one time write-off of obsolete and  discontinued  inventory,  as well as a
$300,000 provision for accrued expenses related to the pending Merger, offset by
a $108,000 credit for deferred income tax benefits  ($99,000 of which related to
such accrued  expenses).  Cash of $80,093 was used in investing  activities  for
capital  expenditures.  The Company  believes  that its present cash and cash it
expects to generate from  operations  will be sufficient to meet its operational
needs in fiscal 1999.  Steiner  proposes to obtain a revolving  credit  facility
subsequent to the Merger to support the activities of Steiner.

Year 2000 Compliance

         The Company believes that its internal management  information systems,
billing,  payroll and other  information  services are Year 2000 compliant.  The
Company has already  upgraded its software  programs at cost of less than $2,000
and  has  carried  out  certain  tests  of its  accounts  payable  and  accounts
receivable  files  which are date  sensitive  and found all  systems  to operate
properly.

         The Company believes that one of its transmission  products is not Year
2000 compliant.  The Company is reviewing certain  engineering  changes for this
product.  The product tests  transmission  qualities of telephone circuits which
are not date  sensitive  and will not  obsolete  units in the  field.  Liability
exposure,  if any,  associated with this product,  which sells for approximately
$5,000 per unit, is believed by the Company to be minimal.  The Company has sold
approximately 12 of these units in the past five years.


                                       -9-

<PAGE>


         The  Company is not linked by  computer  with any of its  customers  or
vendors. Orders are received and purchase orders are sent by telecopy, telephone
or mail. None of these methods are date sensitive.

                                      -10-

<PAGE>


Item 7.           Financial Statements.
------            --------------------

                  The  following   financial   statements  of  the  Company  are
contained on the pages indicated:.
                                                                           Page
                                                                           ----

                    Report of Independent Certified Public Accountants       12

                    Financial Statements:

                       Balance Sheets - June 30, 1997 and 1998               13

                       Statements of Operations - years ended                15
                       June 30, 1997 and 1998

                       Statement of Changes in Stockholders' Equity -        16
                       years ended June 30, 1997 and 1998

                       Statements of Cash Flows - years ended                17
                       June 30, 1997 and 1998

                       Notes to Financial Statements                         18


                                      -11-

<PAGE>



Report of Independent Certified Public Accountants
--------------------------------------------------





Board of Directors and Stockholders
Metro Tel Corp.

We have audited the  accompanying  balance  sheets of Metro Tel Corp. as of June
30,  1997 and  1998,  and the  related  statements  of  operations,  changes  in
stockholders'  equity and cash flows for the years 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 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 Metro Tel Corp. as of June 30,
1997 and 1998,  and the  results  of its  operations  and its cash flows for the
years then ended in conformity with generally accepted accounting principles.




/S/ Grant Thornton, LLP
San Jose, California
August 10, 1998

                                      -12-

<PAGE>
<TABLE>
<CAPTION>

                                 Metro Tel Corp.

                                 BALANCE SHEETS

                                    June 30,



                                     ASSETS

                                                                                             1997            1998
                                                                                            ------           ----
<S>                                                                                   <C>            <C>        
CURRENT ASSETS
   Cash and cash equivalents                                                            $   498,615    $   475,508
   Trade receivables, net of allowance for doubtful accounts of
      $10,000 in 1997 and 1998                                                              550,457        486,144
   Inventories                                                                            1,516,339      1,434,147
   Prepaid expenses and other                                                                43,696         78,766
                                                                                     --------------      ----------
              Total current assets                                                        2,609,107      2,474,565

DEFERRED INCOME TAXES                                                                        27,000        133,000

PROPERTY AND EQUIPMENT - AT COST
   Machinery and equipment                                                                  486,683        566,732
   Furniture and fixtures                                                                    76,883         76,927
   Leasehold improvements                                                                     8,765          8,765
                                                                                      -------------       ----------
                                                                                            572,331        652,424
Less accumulated depreciation and amortization                                              457,671        501,078
                                                                                      -------------       ----------
                                                                                            114,660        151,346
OTHER ASSETS
   Goodwill, net of accumulated amortization of $399,255 in 1997
      and $429,071 in 1998                                                                   793,444        763,628
   Other, net                                                                                 10,465          9,676
                                                                                      --------------     ----------

                                                                                            803,909         773,304
                                                                                      --------------     ----------
                                                                                         $3,554,676      $3,532,215
                                                                                      =============      ==========

</TABLE>

The accompanying notes are an integral part of these statements.
                          -13-

<PAGE>

                                 Metro Tel Corp.

                           BALANCE SHEETS (continued)

                                    June 30,


<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                             1997             1998
                                                                                             ----             ----

<S>
CURRENT LIABILITIES                                                                                  <C>             <C>         
   Accounts payable                                                                     $    212,171    $    196,694
   Accrued liabilities                                                                       171,880         216,566
   Accrued expenses related to pending acquisition                                                 -         300,000
                                                                                        -------------   ------------     
              Total current liabilities                                                      384,051         713,260

DEFERRED INCOME TAXES                                                                          7,000           5,000

COMMITMENTS AND CONTINGENCIES                                                                      -               -

STOCKHOLDERS' EQUITY

   Common stock, 6,000,000 shares authorized,
      2,080,296 shares issued and 2,054,046 shares
      outstanding in 1997 and 1998                                                            52,007          52,007
   Additional paid-in capital                                                              2,152,423       2,152,423
   Retained earnings                                                                       1,027,945         678,275
                                                                                       -------------     -----------
                                                                                           3,232,375       2,882,705
   Less 26,250 shares of treasury stock - at cost                                           (68,750)        (68,750)
                                                                                       -------------     -----------
                                                                                          3,163,625        2,813,955

                                                                                        $ 3,554,676      $ 3,532,215
                                                                                       ============      =========== 


</TABLE>

The accompanying notes are an integral part of these statements.

                                      -14-

<PAGE>


                                 Metro Tel Corp.

                            STATEMENTS OF OPERATIONS

                              Years ended June 30,

<TABLE>
<CAPTION>


                                                                                           1997            1998
                                                                                           ----            ----
<S>                                                                                    <C>            <C>        
Net sales                                                                                 $ 3,882,818    $ 3,839,077
Cost of goods sold                                                                          2,413,529      2,570,561
                                                                                       --------------   ------------    
           Gross profit                                                                     1,469,289      1,268,516

Selling, general and administrative expenses                                                1,212,361      1,249,612
Expenses related to pending acquisition                                                             -        300,000
Research and development                                                                      238,061        228,755
Interest and other income                                                                     (6,254)       (10,181)
                                                                                       --------------   ------------ 
                                                                                           1,444,168       1,768,186
                                                                                       --------------   ------------

           Earnings (loss) before provision for income taxes                                  25,121      (499,670)

Provision for income taxes                                                                    13,000       (150,000)
                                                                                       --------------   ------------

           NET EARNINGS (LOSS)                                                          $     12,121    $  (349,670)
                                                                                       ==============   ============             

Earnings (loss) per common share - Basic and diluted                                             $.01         $(.17)

Weighted average number of common shares outstanding -
   Basic and diluted                                                                        2,025,711      2,054,046


</TABLE>

     The accompanying notes are an integral part of these statements.

                                      -15-

<PAGE>

                                 Metro Tel Corp.

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                       Years ended June 30, 1997 and 1998
<TABLE>
<CAPTION>




                                           Common Stock          Additional
                                         $.025 Par Value          Paid-in        Retained      Treasury
                                       Shares        Amount       Capital        Earnings        Stock         Total
                                       ------        ------      ----------      --------      --------        -----

<S>                                 <C>           <C>          <C>            <C>           <C>            <C>       
Balance at July 1, 1996                 2,030,296     $50,757      $2,107,173     $1,015,824    $(68,750)      $3,105,004

   Net earnings                                 -           -               -         12,121            -          12,121

   Stock options exercised                 50,000       1,250          45,250              -            -          46,500
                                      -----------     -------      ----------     ----------    ---------      ----------

Balance at June 30, 1997                2,080,296      52,007       2,152,423      1,027,945     (68,750)       3,163,625

   Net loss                                     -           -               -      (349,670)            -       (349,670)
                                      -----------     -------      ----------     ----------    ---------      ----------


Balance at June 30, 1998               2,080,296      $52,007      $2,152,423    $   678,275    $(68,750)      $2,813,955
                                      ===========     =======      ==========    ===========    =========      ==========



</TABLE>

     The accompanying notes are an integral part of this statement.

                                      -16-

<PAGE>
<TABLE>
<CAPTION>


                                 Metro Tel Corp.

                            STATEMENTS OF CASH FLOWS

                              Years ended June 30,

                                                                                              1997          1998
                                                                                             ------         ----
<S>                                                                                        <C>           <C>
Cash flows from operating activities:                                                       
   Net earnings (loss)                                                                        $  12,121    $(349,670)
   Adjustments to reconcile net earnings (loss) to net cash provided
      by operating activities
        Depreciation and amortization                                                            66,558        74,012
        Deferred income taxes                                                                   (3,000)     (108,000)
        (Increase) decrease in operating assets:
           Trade receivables                                                                    165,646        64,313
           Inventories                                                                        (102,960)        82,192
           Prepaid expenses and other assets                                                   (18,345)      (35,070)
        Increase (decrease) in operating liabilities:
           Accounts payable                                                                       2,203      (15,477)
           Accrued liabilities                                                                  (2,324)        44,686
           Accrued expenses related to pending acquisition                                            -       300,000
           Income taxes payable                                                                (18,866)             -
                                                                                              ----------   ----------              
              Net cash provided by operating activities                                         101,033        56,986

Cash flows from investing activities:
   Capital expenditures                                                                        (60,842)      (80,093)


Cash flows from financing activities:
   Issuance of common stock                                                                     46,500              -
                                                                                              ----------   ----------              
        NET INCREASE (DECREASE) IN CASH AND CASH                                                86,691       (23,107)
        EQUIVALENTS

Cash and cash equivalents at beginning of year                                                 411,924        498,615
                                                                                             -----------   ----------
    
Cash and cash equivalents at end of year                                                      $498,615      $ 475,508
                                                                                             ===========   ========== 
Supplemental disclosure of cash flow information:

   Cash paid during the year for:
      Income taxes                                                                            $  60,127   $     1,989

</TABLE>

     The accompanying notes are an integral part of these statements.

                                      -17-

<PAGE>
                                 Metro Tel Corp.

                          NOTES TO FINANCIAL STATEMENTS

                             June 30, 1997 and 1998



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Metro Tel Corp.  (the  "Company")  is a  Delaware  corporation  engaged
         principally in the manufacture and sale of telephone test equipment and
         customer  premise  equipment,  as  well  as  related  accessories.  The
         principal  market for the Company's  products is the United  States.  A
         summary  of  the  significant   accounting   policies  applied  in  the
         preparation of the accompanying financial statements follows:

         1.       Revenue Recognition

                  Sales are recorded as products are shipped.

         2.       Inventories

                  Inventories are stated at the lower of cost or market. Cost is
                  principally  determined by the weighted average method,  which
                  approximates the first-in, first-out ("FIFO") method.

         3.       Property and Equipment

                  Property and  equipment are stated at cost,  less  accumulated
                  depreciation and  amortization.  Depreciation and amortization
                  are provided for in amounts  sufficient  to relate the cost of
                  depreciable  assets to operations over their estimated  useful
                  lives  (generally 5 to 10 years),  on a  straight-line  basis.
                  Depreciation  and  amortization  of property and equipment was
                  $36,740 and $43,407 in fiscal 1997 and 1998, respectively.

         4.       Goodwill

                  Goodwill, representing cost in excess of the book value of net
                  assets acquired,  is being amortized on a straight-line  basis
                  over a period of 40 years.  On an  ongoing  basis,  management
                  reviews  the  valuation  and   amortization   of  goodwill  to
                  determine possible  impairment by comparing the carrying value
                  to the undiscounted future cash flows of the related assets.

         5.       Income Taxes

                  Deferred income taxes are recognized for temporary differences
                  between the financial statement and income tax bases of assets
                  and  liabilities  and  loss   carryforwards   and  tax  credit
                  carryforwards for which income tax benefits are expected to be
                  realized in future years. A valuation allowance is established
                  to reduce deferred tax assets if it is more likely than not


                                      -18-

<PAGE>

                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

                  that all, or some  portion,  of such  deferred tax assets will
                  not be realized.  The effect on deferred  taxes of a change in
                  tax rates is  recognized in the statement of operations in the
                  period that includes the enactment date.

         6.       Earnings (Loss) Per Common Share

                  The  Company  has  adopted  the  provisions  of  Statement  of
                  Financial  Accounting Standards ("SFAS") No. 128, Earnings Per
                  Share, for all periods presented. SFAS No. 128 requires a dual
                  presentation of basic and diluted earnings per share.

                  Basic  earnings  (loss)  per  common  share is based  upon the
                  weighted average number of shares of common stock  outstanding
                  during the year.  Common stock equivalents are included in the
                  weighted  average  number of common  shares  outstanding,  for
                  purposes of calculating diluted earnings per share, when their
                  effect is dilutive.  The effect of common stock equivalents on
                  earnings (loss) per share is  anti-dilutive  in 1997 and 1998.
                  The  adoption of SFAS No. 128 for fiscal 1997 had no impact on
                  previously reported earnings per share.

         7.       Cash and Cash Equivalents

                  The  Company  considers  all highly  liquid  investments  with
                  original  maturities  of  three  months  or  less  to be  cash
                  equivalents for purposes of the statement of cash flows.

         8.       Principal Customers

                  The Company sells its products principally to companies in the
                  telecommunications  industry  and to  distributors,  with  its
                  credit risk being dependent on the economic  conditions of the
                  industry and generally  prevailing  economic  conditions.  The
                  Company performs  ongoing credit  evaluations of its customers
                  and  does  not  generally  require  collateral.  Sales  to two
                  customers  accounted for 19% and 10% of total sales for fiscal
                  1997 and 15% and 11% of  total  sales  for  fiscal  1998.  Two
                  customers  accounted for 18% and 16% of trade  receivables  at
                  June 30, 1997 and 15% and 13% of trade receivables at June 30,
                  1998.

                                      -19-

<PAGE>


                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         9.       Use of Estimates

                  In preparing financial statements in conformity with generally
                  accepted accounting principles, management is required to make
                  estimates and assumptions  that affect the reported amounts of
                  assets and liabilities and disclosure of contingent assets and
                  liabilities at the date of the financial  statements,  as well
                  as the reported  amounts of revenues  and expenses  during the
                  reporting  period.  Actual  results  could  differ  from those
                  estimates.


NOTE B - INVENTORIES

The components of inventories are summarized as follows:

                                              June 30,
                                              -------
                                      1997              1998
                                      ----              ----

Raw materials                        $692,368          $640,414
Work-in-process                       232,818           289,498
Finished goods                        591,153           504,235

                                   $1,516,339        $1,434,147
                                   ==========        ==========

NOTE C - STOCK OPTIONS

         The  Company  has  in  effect  a  1991  Stock  Option  Plan  and a 1994
         Non-Employee  Director  Stock Option Plan that  authorize  the grant of
         options to purchase  250,000 and 100,000 shares,  respectively,  of the
         Company's  common stock to key management  employees of the Company and
         members of the Company's  Board of Directors,  respectively.  The plans
         provide that option  prices will not be less than the fair market value
         per  share  on  the  date  the  option  is  granted.   Accordingly,  no
         compensation  cost has been  recognized  for options  granted under the
         plans. Had compensation cost for the plans been determined based on the
         fair value of the options at the grant dates consistent with the method
         prescribed in SFAS No. 123,  Accounting for  Stock-Based  Compensation,
         the  Company's  net  earnings  and  earnings  per share would have been
         reduced to the pro forma amounts indicated below. Pro forma amounts for
         1997 and 1998 may not be  indicative  of pro  forma  results  in future
         periods  because the pro forma  amounts  below do not include pro forma
         compensation cost for options granted prior to fiscal 1996.

                                      -20-

<PAGE>


                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


NOTE C - STOCK OPTIONS (continued)

                                             1997                  1998
                                          ----------            -------

         Net earnings (loss)
             As reported                    $12,121             $(349,670)
             Pro forma                        2,087              (357,311)

         Per share
             As reported                      $0.01                 $(.17)
             Pro forma                         0.00                  (.17)

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes  options  pricing  model  with the  following
         weighted-average  assumptions  used for grants in 1997  (there  were no
         grants  in  1998):  no  dividend  yield;  expected  volatility  of 90%;
         risk-free interest rate of 5.9%; and expected lives of 4 years.

         In  addition,  in each of June 1991 and May 1993,  the Company  granted
         stock  options  to  purchase  30,000  shares  of its  common  stock  to
         nonemployee  directors  at an  exercise  price of $1.19  and  $1.00 per
         share,  respectively,  the fair  market  values  on the dates of grant.
         These options were not granted  pursuant to the Company's  stock option
         plans.  Options for 20,000  shares  expired in May 1996.  The remaining
         options  to  purchase  40,000  shares are  exercisable  over a ten-year
         period.

         A summary of the status of options  granted under the  Company's  stock
         options plans,  including  options  granted to  non-employee  directors
         prior to the 1994  Plan,  as of June 30,  1997 and  1998,  and  changes
         during the years ended on those dates, is presented below.

<TABLE>
<CAPTION>

                                                  1997                        1998
                                                  ----                        ----

                                                       Weighted                       Weighted
                                                        Average                       Average
                                                       Exercise                       Exercise
                                         Shares          Price         Shares          Price
                                         -----         --------        ------        ---------
<S>                                    <C>            <C>       <C>             <C>  
Outstanding at beginning of year       231,000           $0.98        225,000         $0.98
Granted                                 90,000            0.90           -              -
Exercised                             (50,000)            0.93           -              -
Canceled or expired                   (46,000)            0.85           -              -
                                      --------                     -------------
Outstanding at end of year             225,000           $0.98        225,000         $0.98
Weighted average grant-date fair value
of options granted during the year                       $0.65                          -

</TABLE>

                                      -21-
<PAGE>


NOTE C - STOCK OPTIONS (continued)

         The following  information relates to stock options outstanding at June
30, 1998:

           Range of exercise prices                               $0.81-$1.19
           Options outstanding                                        225,000
           Weighted average exercise price of options outstanding       $0.98
           Weighted average remaining contractual life (years)              8
           Options exercisable                                        209,000
           Weighted average exercise price of options exercisable       $0.98


NOTE D - INCOME TAXES

         The provision (benefit) for income taxes is summarized as follows:

                                                          June 30,
                                                          -------
                                                 1997             1998
                                                 ----             ----

           Current
               Federal                          $11,000        $(40,000)
               State                              5,000          (2,000)
           Deferred                              (3,000)       (108,000)
                                              ---------       ----------
                                                $13,000       $(150,000)
                                              =========       ==========

         The tax effects of  temporary  differences  which give rise to deferred
         tax assets (liabilities) are summarized as follows:

                                                            June 30,
                                                            -------
                                                      1997             1998
                                                      ----             ----
         Deferred tax assets (liabilities)
           Acquisition costs                    $        -            $99,000
           Operating loss carryforward                   -              7,000
           Inventory capitalization                   15,500           14,000
           Vacation accrual                            8,500           10,000
           Trade receivables                           3,000            3,000
           Depreciation                               (7,000)          (5,000)
                                                      ------          -------
                                                      20,000          128,000
         Valuation allowance                             -                -
                                                      ------          -------

               Net deferred tax asset                $20,000         $128,000
                                                     =======         ========


                                      -22-

<PAGE>


                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


         The following is a reconciliation  of the provision for income taxes to
         the Federal statutory income tax rate:

                                                          June 30,
                                                          -------

                                                    1997             1998
                                                    ----             ----

         Federal statutory rate                    34.0%          (34.0)%
         State taxes, net of Federal benefit        6.5            (4.2)
         Amortization of goodwill                  13.2               2.0
         Effect of operating loss carryback         -                 5.5
         Effect of graduated Federal tax rates    (11.9)                -
         Other, net                                 9.9                .7
                                                 ------          --------

                                                   51.7%          (30.0)%
                                                 ======           ======


NOTE E - ACCRUED LIABILITIES

         Accrued liabilities are summarized as follows:

                                                           June 30,
                                                           -------
                                                  1997             1998
                                                  ----             ----

         Payroll and employee benefits           $80,934         $108,387
         Profit-sharing contributions             49,589           54,528
         Accrued professional fees                36,000           36,000
         Other                                     5,357           17,651
                                             -----------       ----------

                                                $171,880         $216,566
                                             ===========       ==========

NOTE F - EMPLOYEE BENEFIT PLANS

         The Company maintains a profit-sharing plan which covers  substantially
         all employees.  Annual  contributions,  determined at the discretion of
         the Board of  Directors,  were  $49,589 in fiscal  1997 and  $54,527 in
         fiscal 1998.

         The  Company  also  maintains  a 401(k)  retirement  plan which  covers
         substantially  all  employees  and  provides  for  voluntary   employee
         contributions  with employer matching  contributions of up to 2% of the
         employee's  compensation.  The Company's matching contribution for this
         401(k) retirement plan was $19,000 for both fiscal 1997 and 1998.


                                      -23-

<PAGE>
                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


NOTE G - COMMITMENTS AND CONTINGENCIES

         Leases

         The  Company  occupies  a  manufacturing  and  warehouse   facility  in
         California  pursuant to a  noncancelable  operating  lease  expiring in
         March 1999. This lease does not contain a renewal  option.  The minimum
         rental commitment under this lease, at June 30, 1998, is $87,000.

         Rent   expense   charged  to   operations   (including   rent  under  a
         noncancelable lease for an office facility in New York which expired in
         February  1997) was  $147,000  and  $116,000  for fiscal 1997 and 1998,
         respectively.

         Employment Agreements

         The Company is obligated under an employment  agreement,  expiring June
         30, 2001,  with an officer to pay  $173,000  per annum.  The Company is
         also a  party  to an  employment  arrangement  with  another  executive
         officer  pursuant  to which he has been  receiving a salary of $150,000
         per annum since July 1, 1997.

         Royalty Agreement

         The Company is presently  obligated  pursuant to a royalty agreement to
         pay the  greater of 10% of sales of  certain  products  or $75,000  per
         year.  Payments  were  $79,800 and  $113,000  for fiscal 1997 and 1998,
         respectively.  The  Company  is also  obligated  pursuant  to a  second
         royalty agreement to pay 10% of annual sales of certain other products.
         Payments  under the second  royalty  agreement were $27,000 and $10,000
         for fiscal 1997 and 1998, respectively.


NOTE H - EXPORT SALES

         Export  sales were  approximately  $252,000 and $189,000 in fiscal 1997
and 1998, respectively.


NOTE I - FINANCIAL INSTRUMENTS

         The carrying amounts of financial  instruments  including cash and cash
         equivalents, accounts receivable and accounts payable approximated fair
         value as of June 30, 1997 and 1998.

                                      -24-

<PAGE>


                                 Metro Tel Corp.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                             June 30, 1997 and 1998


NOTE J - SUBSEQUENT EVENTS

         On  July  1,  1998,  the  Company  and   Steiner-Atlantic   Corporation
         ("Steiner")  entered into an agreement which provides for the merger of
         a  newly-formed  Subsidiary of the Company with and into Steiner.  Upon
         completion of the merger, Steiner will become a wholly-owned subsidiary
         of the Company and the Company would issue  4,720,954  shares of common
         stock to the present  shareholders  of Steiner,  which would  represent
         approximately 69% of the shares to be outstanding immediately following
         the  completion  of the merger.  In  addition,  the Company  will grant
         options at 100% of fair market  value for the purchase of up to 500,000
         shares of its common stock to  employees of Steiner  other than Steiner
         shareholders.

         For financial accounting  purposes,  this transaction will be accounted
         for as a reverse acquisition of the Company by Steiner.

                                      -25-

<PAGE>



Item 8.           Changes in and Disagreements With
------         Accountants on Accounting and Financial Disclosure.
               --------------------------------------------------

                  Not applicable.

                                    PART III
                                    --------

Item 9.      Directors, Executive Officers, Promoters and Control Persons;
------           Compliance with Section 16(a) of the Exchange Act.
             ------------------------------------------------------------

                  The  following  information  is presented  with respect to the
background of each of the directors and executive officers of the Company:

                  Venerando J. Indelicato,  65, has been President and Treasurer
of the  Company  for more than the past five years.  Mr.  Indelicato  has been a
director of the Company since 1966.

                  Richard A. Wildman,  44, has been  Executive Vice President of
the Company since  September 1996. For more than five years prior to joining the
Company,  Mr. Wildman served in various sales and marketing capacities with AT&T
Corp., most recently directing its western phone store operations.

                  Lloyd  Frank,  73, has been a member of the law firm of Parker
Chapin Flattau & Klimpl for more than the past five years.  Mr. Frank has been a
director of the Company since 1977. The Company retained Parker Chapin Flattau &
Klimpl during the Company's  last fiscal year and is retaining  that firm during
the  Company's  current  fiscal  year.  Mr.  Frank  is also a  director  of Park
Electrochemical Corp.

                  Michael Michaelson, 75, has been an independent publishing and
marketing  consultant for more than the past five years. Mr. Michaelson has been
a director of the Company since 1978.

                  Michael  Epstein,  60, has been an independent  investor since
December  1993.  For more than five  years  prior  thereto  Mr.  Epstein  was an
investment  banker  with  the  investment   banking  firm  of  Allen  &  Company
Incorporated.

                  There are no family  relationships  among any of the directors
and executive officers of the Company. All directors serve until the next annual
meeting of stockholders  (scheduled to be held on or about October 29, 1998) and
until  the  election  and  qualification  of their  respective  successors.  All
officers serve at the pleasure of the Board of Directors.

                  The  following  information  is presented  with respect to the
background of each person who is not an executive officer but who is expected to
make a significant contribution to the Company:

                                      -26-

<PAGE>



                  Howard  Perera,  46, has served as the  Company's  Director of
Engineering, engaged in the design and development of new products since joining
the Company in September 1993. For approximately five years prior to joining the
Company, Mr. Perera served as a product manager for DCM Corp.

                  Jon D. Robinette,  41, has, since July 1995, served as General
Manager of the Company,  responsible for managing and coordinating operations in
the Company's Milpitas, California facility. Prior thereto, Mr. Robinette served
as Operations Manager for the Company from October 1984.

Item 10.          Executive Compensation.
-------           ----------------------

                  The  information  called for by this Item will be contained in
the Company's  definitive  Proxy  Statement  with respect to the Company's  1998
Annual Meeting of  Stockholders to be filed pursuant to Regulation l4A under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.

Item 11.         Security Ownership of Certain Beneficial Owners and Management.
-------          --------------------------------------------------------------

                  The  information  called for by this Item will be contained in
the Company's  definitive  Proxy  Statement  with respect to the Company's  1998
Annual Meeting of  Stockholders to be filed pursuant to Regulation l4A under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.

Item 12.          Certain Relationships and Related Transactions.
-------           ----------------------------------------------

                  The  information  called for by this Item will be contained in
the Company's  definitive  Proxy  Statement  with respect to the Company's  1998
Annual Meeting of  Stockholders to be filed pursuant to Regulation l4A under the
Securities Exchange Act of 1934, and is incorporated herein by reference to such
information.

Item 13.          Exhibits and Reports on Form 8-K.
-------           --------------------------------


                  (a)      Exhibits

2(a)(1)           Agreement  of  Merger  dated as of July 1,  1998  between  the
                  Company  and  Steiner-  Atlantic  Corp.  (Exhibit  2.01 to the
                  Company's Current Report on Form 8-K dated July 6, 1998).

3(a)(1)           Copy of Certificate of Incorporation of the Company,  as filed
                  with the  Secretary  of State of the State of Delaware on June
                  30, 1963. (Exhibit 1.1 to the Company's Registration Statement
                  on Form 10, File No. 0-9040).


                                      -27-

<PAGE>



3(a)(2)           Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware on March 27, 1968. (Exhibit 1.2
                  to the Company's  Registration  Statement on Form 10, File No.
                  0-9040).

3(a)(3)           Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware  on  November 4, 1983  (Exhibit
                  3(a)(3) to the Company's Annual Report on Form 10- KSB for the
                  year ended June 30, 1995, File No. 0-9040).

 3(a)(4)          Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware  on  November 5, 1986  (Exhibit
                  3(a)(4) to the Company's Annual Report on Form 10- KSB for the
                  year ended June 30, 1995, File No. 0-9040).

 3(a)(5)          Copy of Certificate of Change of Location of Registered Office
                  and of  Agent,  as filed  with the  Secretary  of State of the
                  State of Delaware on December 31, 1986 (Exhibit 3(a)(5) to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1995, File No. 0-9040).

 3(b)(1)          Copy  of  By-Laws  of  the  Company  (Exhibit  3(b)(1)  to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1996, File No. 0-9040).

 10(a)(1)         Lease  dated  April  1,  1991   between  the  Company  and  CB
                  Institutional   Fund  VII  with   respect  to  the   Company's
                  facilities  at  240  South   Milpitas   Boulevard,   Milpitas,
                  California.  (Exhibit  10(a)(2) to the Company's Annual Report
                  on Form  10-K  for the year  ended  June  30,  1991,  File No.
                  0-9040).

 10(b)(1)(i)+     Employment  Agreement  dated July 1, 1981  between the Company
                  and  Venerando  J.  Indelicato.  (Exhibit  10(b)(1)(i)  to the
                  Company's  Annual  Report  on Form 10- KSB for the year  ended
                  June 30, 1995, File No. 0-9040).

 10(b)(1)(ii)+    Amendment No. 1 dated July 1, 1983 to the Employment Agreement
                  dated  July 1, 1981  between  the  Company  and  Venerando  J.
                  Indelicato.  (Exhibit  10(b)(1)(ii)  to the  Company's  Annual
                  Report on Form 10-KSB for the year ended June 30,  1995,  File
                  No. 0-9040).

 10(b)(2)+        Letter agreement dated August 29, 1996 between the Company and
                  Richard A. Wildman.  (Exhibit 10(b)(2) to the Company's Annual
                  Report on Form 10-KSB for the year ended June 30,  1997,  File
                  No. 0-9040).

 10(c)(1)+        The Company's 1991 Stock Option Plan (Exhibit  10(c)(1) to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1996, File No. 0- 9040).


                                      -28-

<PAGE>



  10(c)(2)(a)+    The Company's 1984 Non-Employee Director Stock Option Plan, as
                  amended.  (Exhibit  10(d)(2) to the Company's Annual Report on
                  Form 10-K for the year ended June 30, 1987, File No. 0-9040).

  10(c)(2)(b)+    The Company's  1994  Non-Employee  Director Stock Option Plan.
                  (Exhibit A to the Company's  Proxy Statement dated October 14,
                  1994 used in connection with the Company's 1994 Annual Meeting
                  of Stockholders, File No. 0-9040).

  10(c)(3)+       Form of Stock  Option  Agreement  dated June 25, 1991  entered
                  into between the Company and each of Sheppard  Beidler (option
                  has  since  expired),  Lloyd  Frank  and  Michael  Michaelson,
                  together with a schedule  identifying the details in which the
                  actual  agreements  differ  from the exhibit  filed  herewith.
                  (Exhibit  10(c)(4) to the Company's Annual Report on Form 10-K
                  for the year ended June 30, 1991, File No. 0-9040).

 10(c)(4)+        Form of Stock Option  Agreement dated May 4, 1993 entered into
                  between the Company and each of Sheppard Beidler,  Lloyd Frank
                  and Michael Michaelson,  together with a schedule  identifying
                  the  details in which the actual  agreements  differ  from the
                  exhibit  filed  herewith.  (Exhibit  10(c)(4) to the Company's
                  Annual Report on Form 10-KSB for the year ended June 30, 1993,
                  File No. 0-9040).

*27               Financial Data Schedule.

--------------------

*                 Filed herewith.  All other exhibits are incorporated herein by
                  reference  to  the  filing  indicated  in  the   parenthetical
                  reference following the exhibit description.

+                 Management contract or compensatory plan or arrangement.

                  (b)      Reports on Form 8-K

                  No Reports on Form 8-K were  filed by the  Company  during the
last fiscal quarter of the Company's fiscal year ended June 30, 1998.  Following
the close of the fiscal  year,  the Company  filed a Current  Report on Form 8-K
dated (Date of earliest event  reported) July 6, 1998 reporting under Item 5 and
Item 7. No financial statements were filed with that Report.


                                      -29-

<PAGE>



                                   SIGNATURES


                    Pursuant to the  requirements  of Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the Company has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                               METRO-TEL CORP.

Dated:  September 28, 1998

                                               By: /s/ VENERANDO J. INDELICATO
                                                   -----------------------------
                                                   Venerando J. Indelicato,
                                                          President

                    Pursuant to the requirements 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 on the dates indicated.
<TABLE>
<CAPTION>


     Signature                                   Capacity                          Date
     ---------                                   ---------                         ----

<S>                                            <C>                              <C>             
VENERANDO J. INDELICATO                          President, Treasurer             September 28, 1998
-----------------------                          (Principal Executive, 
Venerando J. Indelicato                          Financial and         
                                                 Accounting Officer)   
                                                 and Director  

MICHAEL EPSTEIN                                  Director                        September 28, 1998
----------------------- 
Michael Epstein


LLOYD FRANK                                      Director                        September 28, 1998
----------------------- 
Lloyd Frank


MICHAEL MICHAELSON                               Director                        September 28, 1998
----------------------- 
Michael Michaelson

</TABLE>


                                      -30-

<PAGE>



                                  EXHIBIT INDEX

Exhibit
Number                                   Description
-------                                  -----------

2(a)(1)           Agreement  of  Merger  dated as of July 1,  1998  between  the
                  Company  and  Steiner-Atlantic  Corp.  (Exhibit  2.01  to  the
                  Company's Current Report on Form 8-K dated July 6, 1998).

3(a)(1)           Copy of Certificate of Incorporation of the Company,  as filed
                  with the  Secretary  of State of the State of Delaware on June
                  30, 1963. (Exhibit 1.1 to the Company's Registration Statement
                  on Form 10, File No. 0-9040).

3(a)(2)           Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware on March 27, 1968. (Exhibit 1.2
                  to the Company's  Registration  Statement on Form 10, File No.
                  0-9040).

3(a)(3)           Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware  on November 4, 1983.  (Exhibit
                  3(a)(3) to the Company's  Annual Report on Form 10-KSB for the
                  year ended June 30, 1995, File No. 0-9040).

3(a)(4)           Copy  of  Certificate  of  Amendment  to  the  Certificate  of
                  Incorporation  of the Company,  as filed with the Secretary of
                  State of the State of Delaware  on November 5, 1986.  (Exhibit
                  3(a)(4) to the Company's  Annual Report on Form 10-KSB for the
                  year ended June 30, 1995, File No. 0-9040).

3(a)(5)           Copy of Certificate of Change of Location of Registered Office
                  and Agent,  as filed with the  Secretary of State of the State
                  of Delaware  on December  31,  1986.  (Exhibit  3(a)(5) to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1995, File No. 0-9040).

3(b)(1)           Copy  of  By-Laws  of the  Company.  (Exhibit  3(b)(1)  to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1996, File No. 0-9040).

10(a)(1)          Lease  dated  April  1,  1991   between  the  Company  and  CB
                  Institutional   Fund  VII  with   respect  to  the   Company's
                  facilities  at  240  South   Milpitas   Boulevard,   Milpitas,
                  California.  (Exhibit  10(a)(2) to the Company's Annual Report
                  on Form  10-K  for the year  ended  June  30,  1991,  File No.
                  0-9040).

10(b)(1)(i)+      Employment  Agreement  dated July 1, 1981  between the Company
                  and  Venerando  J.  Indelicato.  (Exhibit  10(b)(1)(i)  to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1995, File No. 0-9040).


                                      -31-
<PAGE>



10(b)(1)(ii)+     Amendment No. 1 dated July 1, 1983 to the Employment Agreement
                  dated  July 1, 1981  between  the  Company  and  Venerando  J.
                  Indelicato.  (Exhibit  10(b)(1)(ii)  to the  Company's  Annual
                  Report on Form 10-KSB for the year ended June 30,  1995,  File
                  No. 0-9040).

10(b)(2)+         Letter agreement dated August 29, 1996 between the Company and
                  Richard A. Wildman.  (Exhibit 10(b)(2) to the Company's Annual
                  Report on Form 10- KSB for the year ended June 30, 1997,  File
                  No. 0-9040).

10(c)(1)+         The Company's 1991 Stock Option Plan. (Exhibit 10(c)(1) to the
                  Company's Annual Report on Form 10-KSB for the year ended June
                  30, 1996, File No. 0- 9040).

10(c)(2)(a)+      The Company's 1984 Non-Employee Director Stock Option Plan, as
                  amended.  (Exhibit  10(d)(2) to the Company's Annual Report on
                  Form 10-K for the year ended June 30, 1987, File No. 0-9040).

10(c)(2)(b)+      The Company's  1994  Non-Employee  Director Stock Option Plan.
                  (Exhibit A to the Company's  Proxy Statement dated October 14,
                  1994 used in connection with the Company's 1994 Annual Meeting
                  of Stockholders, File No. 0-9040).

10(c)(3)+         Form of Stock  Option  Agreement  dated June 25, 1991  entered
                  into between the Company and each of Sheppard  Beidler (option
                  has  since  expired),  Lloyd  Frank  and  Michael  Michaelson,
                  together with a schedule  identifying the details in which the
                  actual  agreements  differ  from the exhibit  filed  herewith.
                  (Exhibit  10(c)(4) to the Company's Annual Report on Form 10-K
                  for the year ended June 30, 1991, File No. 0-9040).

10(c)(4)+         Form of Stock Option  Agreement dated May 4, 1993 entered into
                  between the Company and each of Sheppard Beidler,  Lloyd Frank
                  and Michael Michaelson,  together with a schedule  identifying
                  the  details in which the actual  agreements  differ  from the
                  exhibit  filed  herewith.  (Exhibit  10(c)(4) to the Company's
                  Annual Report on Form 10-KSB for the year ended June 30, 1993,
                  File No. 0- 9040).

*27               Financial Data Schedule.

--------------------

*                 Filed herewith.  All other exhibits are incorporated herein by
                  reference  to  the  filing  indicated  in  the   parenthetical
                  reference following the exhibit description.

+                 Management contract or compensatory plan or arrangement.


                                      -32-