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, 1997

[_]    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:  $3,882,818

           The  aggregate  market value as at  September  15, 1997 of the Common
Stock of the issuer,  its only class of voting stock, held by non-affiliates was
approximately  $1,908,000  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, 1997 was 2,054,046.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the issuer's Proxy Statement  relating to its 1997 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
-------

           Metro-Tel Corp. (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.

           The  Company  has  engaged  the  investment  banking  firm of Slusser
Associates,  Inc. as the  Company's  financial  advisor to assist the Company in
evaluating  strategic  alternatives for enhancing  shareholder value,  including
acquisitions, mergers or the sale of the Company.

           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, 1997:


                             1997                1996                1995
                        -------------       -------------       -------------
                        Amount     %        Amount     %        Amount     %
                        ------    ---       ------    ---       ------    ---
                                       (dollars in thousands)
Telephone Test
  Equipment            $3,602      93%     $3,387      80%     $3,596      85%
                                                              
                                                              
Customer Premise                                              
  Equipment               121       3%        606      14%        287       7%
                                                              
Other Products and                                            
  Services                160       4%        236       6%        346       8%
                       ------  ------      ------  ------      ------  ------
                       $3,883     100%     $4,229     100%     $4,229     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

                                       -2-

<PAGE>



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,  which 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 which are used in cable fault finding;  solid state  conversion
amplifier  kits;  Volt-Ohmmeter  test  sets;  and  Cable  Hound(R),  a  portable
electronic  unit 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 California and a sales representative is based in New York. In addition, the
Company  maintains   in-house  sales  staffs  at  its  facilities  in  Milpitas,
California.

                                       -3-

<PAGE>



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 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 16% of the  Company's  net sales for the years ended June
30, 1997 and 1996,  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
1996,  principally  salaries,  was  $238,000  and  $284,000,  respectively.  All
research and development is Company-sponsored,  except for products designed for
the Company by unaffiliated third parties compensated on a royalty basis.



                                       -4-

<PAGE>



           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
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 at August 31, 1997,  the Company had in its employ 30 persons on a
full-time basis. Of these, 16 were engaged in production, 3 in engineering, 5 in
sales and 6 in administration.

Foreign and Government Sales
----------------------------

           Export sales were approximately  $252,000 and $283,000 in fiscal 1997
and 1996,  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.


                                       -5-

<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 1997 and fiscal 1996, 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 1996

             First Quarter           1 3/8       13/16
             Second Quarter          1 3/8        7/8
             Third Quarter           1 3/16       3/4
             Fourth Quarter          1 1/4       15/16


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

           As of  September  15,  1997 there were  approximately  990 holders of
record of the Company's Common Stock.



                                       -6-

<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.

Financial Condition
-------------------

           During the year ended June 30, 1997,  cash  increased by $86,691.  Of
the cash generated by operating activities ($101,033),  $12,121 was derived from
net income and $66,558 was derived from non-cash  expenses for  depreciation and
amortization.  Additional  cash from  operating  activities  was  provided  by a
reduction  in  receivables  ($165,646)  which was offset,  in large part,  by an
increase in  inventories  ($102,960)  to support new products and certain  other
changes  in  operating  assets  and  liabilities.  Cash of  $60,842  was used to
purchase capital assets,  while $46,500 was raised through the issuance of stock
due to the  exercise  of a stock  option.  The Company  has no  commitments  for
capital expenditures, although it intends to continue to purchase capital assets
in the ordinary course of operations.  The Company  believes that the cash which
it expects to generate from  operations  will be sufficient to meet  operational
needs for fiscal 1998.

Results of Operations
---------------------

           Net sales were  $345,738  (8.2%)  lower in fiscal 1997 than in fiscal
1996. Fiscal 1996 sales included non-recurring shipments of CSU/DSU data devices
to an  interexchange  company  completed  in the last  quarter  of fiscal  1996.
Reference  is  made  to the  table  on page 3 of  this  report  for  information
concerning  sales by product  lines  during the three year period ended June 30,
1997.  Sales of telephone test equipment  increased by $214,508 (6.3%) in fiscal
1997,  encompassing  all  test  equipment  categories,  with  transmission  test
equipment  increasing  35.5%,  outside plant test sets 3.3% and installer's test
sets 1.1%. These increases were attributable to the introduction of new products
in each  category,  which  more  than  offset  the  decline  in sales of  mature
products.  In fiscal  1997,  sales of customer  premise  equipment  decreased by
$484,579  (80.0%)  due to the  completion  of the  CSU/DSU  data  devices  sales
discussed  above.  Sales of  miscellaneous  products and  services  decreased by
$75,667  (32.1%)  principally  due to lower  foreign sales of headsets and lower
sales of spare parts.  Price changes in fiscal 1997 were not material to overall
sales,  as prices,  except for some  adjustments  for outside  plant  equipment,
remained relatively constant.

           The  Company's  gross profit  margin,  expressed  as a percentage  of
sales, improved slightly to 37.8% in fiscal 1997 from 37.6% in fiscal 1996, with
improvements  in material  costs  (largely due to a change in the product mix of
sales),  manufacturing  overhead  expenses  (largely due to lower indirect labor
costs) offsetting an increase in direct labor costs.

           Selling, general and administrative expenses increased in fiscal 1997
by $63,272  (5.5%)  and as a  percentage  of sales to 31.2% in fiscal  1997 from
27.2% in fiscal 1996. These increases were primarily the result of the hiring of
an Executive Vice President whose  responsibilities are to reestablish growth in
marketing and sales. In addition, there were increases in advertising expenses


                                       -7-

<PAGE>



and  royalties  and  commissions  paid by the Company.  These  increases  offset
reductions in  administrative  expenses,  consisting mostly of decreases in rent
and payroll,  due to the consolidation of the administrative and sales functions
formerly  conducted in New York with those conducted in the Company's  Milpitas,
California facility.

           Research and  development  expenses  decreased by $45,762  (16.1%) in
fiscal 1997 mainly due to lower salaries and payroll  expenses  resulting from a
restructuring in engineering staff.

           Royalties,  interest  and other income were $4,742  (43.1%)  lower in
fiscal 1997 than in fiscal 1996 when the sale of some fully  depreciated  assets
produced certain non-recurring other income.

           The  provision  for  income  taxes in  fiscal  1997 was  $13,000,  or
approximately 51.7% of pre-tax profits, compared to $44,000, or 26.1% of pre-tax
profits  in fiscal  1996.  The  provision  in fiscal  1997 was  higher  than the
statutory  34% rate due to state  taxes,  non-deductible  charges  to  earnings,
principally goodwill,  and other rate adjustments.  The provision in fiscal 1996
was lower than the statutory rate due to recognition of deferred tax benefits.




                                       -8-

<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         10

                Financial Statements:

                    Balance Sheets - June 30, 1997 and 1996                11

                    Statements of Income - years ended                     13
                    June 30, 1997 and 1996

                    Statement of Changes in Stockholders' Equity -         14
                    years ended June 30, 1997 and 1996

                    Statements of Cash Flows - years ended                 15
                    June 30, 1997 and 1996

                    Notes to Financial Statements                          16



                                       -9-

<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  1996,  and  the  related   statements  of  income,   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 1996,  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 20, 1997


                                      -10-
<PAGE>
                                Metro Tel Corp.

                                 BALANCE SHEETS

                                    June 30,


ASSETS

                                                       1997         1996
                                                       ----         ----
CURRENT ASSETS
 Cash and cash equivalents                        $  498,615   $  411,924
 Trade receivables, net of allowance for
  doubtful accounts of $10,000 in 1997 and 1996      550,457      716,103
 Inventories                                       1,516,339    1,413,379
 Deferred income taxes                                27,000       31,000
 Prepaid expenses and other                           43,696       14,254
                                                  ----------   ----------
     Total current assets                          2,636,107    2,586,660

PROPERTY AND EQUIPMENT - AT COST
 Machinery and equipment                             486,683      470,433
 Furniture and fixtures                               76,883       88,414
 Leasehold improvements                                8,765        8,765
                                                  ----------   ----------
                                                     572,331      567,612
Less accumulated depreciation and amortization       457,671      477,054
                                                  ----------   ----------
                                                     114,660       90,558
                                                  ----------   ----------

OTHER ASSETS
 Goodwill, net of accumulated amortization of
  $399,255 in 1997 and $369,438 in 1996              793,444      823,262
 Other, net                                           10,465       21,562
                                                  ----------   ----------
                                                     803,909      844,824
                                                  ----------   ----------

                                                  $3,554,676   $3,522,042
                                                  ==========   ==========








The accompanying notes are an integral part of these statements.



                                      -11-
<PAGE>

                                Metro Tel Corp.

                           BALANCE SHEETS (continued)

                                    June 30,



LIABILITIES AND STOCKHOLDERS' EQUITY

                                                          1997       1996
                                                          ----       ----
CURRENT LIABILITIES
 Accounts payable                                    $   212,171    $   209,968
 Accrued liabilities                                     171,880        174,204
 Income taxes payable                                       --           18,886
                                                     -----------    -----------
     Total current liabilities                           384,051        403,038

DEFERRED INCOME TAXES                                      7,000         14,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Common stock, $.025 par value,  6,000,000 shares
  authorized,  2,080,296 shares issued and
  2,054,046 shares  outstanding in 1997,
  2,030,296 shares issued and 2,004,046 outstanding
  in 1996                                                 52,007         50,757
 Additional paid-in capital                            2,152,423      2,107,173
 Retained earnings                                     1,027,945      1,015,824
                                                     -----------    -----------
                                                       3,232,375      3,173,754
 Less 26,250 shares of treasury stock - at cost          (68,750)       (68,750)
                                                     -----------    -----------
                                                       3,163,625      3,105,004
                                                     -----------    -----------
                                                     $ 3,554,676    $ 3,522,042
                                                     ===========    ===========















The accompanying notes are an integral part of these statements.

                                      -12-
<PAGE>

                                Metro Tel Corp.

                              STATEMENTS OF INCOME

                              Year ended June 30,


<TABLE>
<CAPTION>
                                                           1997           1996
                                                           ----           ----
<S>                                                    <C>            <C>        
Net sales                                              $ 3,882,818    $ 4,228,556
Cost of goods sold                                       2,413,529      2,638,168
                                                       -----------    -----------

    Gross profit                                         1,469,289      1,590,388

Selling, general and administrative expenses             1,212,361      1,149,089
Research and development                                   238,061        283,823
Interest and other income                                   (6,254)       (10,996)
                                                       -----------    -----------
                                                         1,444,168      1,421,916
                                                       -----------    -----------

    Earnings before provision for income taxes              25,121        168,472

Provision for income taxes                                  13,000         44,000
                                                       -----------    -----------

    NET EARNINGS                                       $    12,121    $   124,472
                                                       ===========    ===========

Earnings per common share                              $       .01    $       .06
                                                       ===========    ===========

Weighted average number of common shares outstanding     2,025,711      2,004,046
                                                       ===========    ===========

</TABLE>









The accompanying notes are an integral part of these statements.

                                      -13-



<PAGE>

Metro Tel Corp.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Years ended June 30, 1997 and 1996

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

<S>                         <C>         <C>          <C>          <C>          <C>           <C>       
Balance at July 1, 1995     2,030,296   $   50,757   $2,107,173   $  891,352   $  (68,750)   $2,980,532

 Net earnings                    --           --           --        124,472         --         124,472
                           ----------   ----------   ----------   ----------   ----------    ----------

Balance at June 30, 1996    2,030,296       50,757    2,107,173    1,015,824      (68,750)    3,105,004

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

 Stock option 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
                           ==========   ==========   ==========   ==========   ==========    ==========
</TABLE>














The accompanying notes are an integral part of this statement.

                                      -14-
<PAGE>

                                Metro Tel Corp.

                            STATEMENTS OF CASH FLOWS

                              Year ended June 30,



                                                           1997         1996
                                                           ----         ----

Cash flows from operating activities:
 Net earnings                                          $  12,121    $ 124,472
 Adjustments to reconcile net earnings to net cash
  provided by operating activities
   Depreciation and amortization                          66,558       72,158
   Deferred income taxes                                  (3,000)     (17,000)
   Gain on disposition of fixed assets                      --         (3,562)
   Allowance for doubtful accounts                          --        (10,000)
   (Increase) decrease in operating assets:
    Trade receivables                                    165,646     (107,822)
    Inventories                                         (102,960)      85,183
    Prepaid expenses and other assets                    (18,345)       1,887
   Increase (decrease) in operating liabilities:
    Accounts payable                                       2,203       13,590
    Accrued liabilities                                   (2,324)      20,048
    Income taxes payable                                 (18,866)     (12,099)
                                                       ---------    ---------
     Net cash provided by operating activities           101,033      166,855

Cash flows from investing activities:
 Capital expenditures                                    (60,842)     (52,088)

Cash flows from financing activities:
 Issuance of common stock                                 46,500         --
                                                       ---------    ---------

     NET INCREASE IN CASH AND CASH EQUIVALENTS            86,691      114,767
                                                       ---------    ---------

Cash and cash equivalents at beginning of year           411,924      297,157
                                                       ---------    ---------

Cash and cash equivalents at end of year               $ 498,615    $ 411,924
                                                       =========    =========

Supplemental  disclosures  of cash flow  information:  
 Cash paid during the year for:
  Income taxes                                         $  60,127    $  77,486





The accompanying notes are an integral part of these statements.

                                      -15-



<PAGE>




                                 METRO TEL CORP.

                          NOTES TO FINANCIAL STATEMENTS

                             JUNE 30, 1997 AND 1996



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  consistently 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.  Market value is
        determined on the basis of replacement cost or net realizable value.

    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 $34,140 in fiscal 1997 and 1996, 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  would be established  to reduce  deferred tax assets if it is
        more likely than not 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 income in the period that
        includes the enactment date.


                                      -16
<PAGE>


                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    6.  Earnings Per Common Share

        Earnings 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 when their effect is dilutive.

        In February  1997,  the  Financial  Accounting  Standards  Board  issued
        Statement of Financial  Accounting  Standards ("SFAS") No. 128, Earnings
        Per Share. SFAS No. 128 simplifies the standards for computing  earnings
        per share previously found in APB Opinion No. 15, Earnings Per Share and
        is effective for financial  statements  issued for periods  ending after
        December 15, 1997,  including  interim periods;  earlier adoption is not
        permitted.  The Company  does not expect the adoption of SFAS No. 128 to
        have a significant impact to its reported results.

    7. Cash Equivalents

       The Company  considers  certificates  of deposit and time  deposits  with
       original  maturities of three months or less to be cash  equivalents  for
       purposes of the statements 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.
       Approximately  40% of the Company's trade  receivables were  concentrated
       with three  customers  at June 30,  1997,  with sales to one  distributor
       representing   approximately   19%  of  net  sales  during  fiscal  1997.
       Approximately  31% of the Company's trade  receivables were  concentrated
       with three  customers  at June 30, 1996,  with sales to two  distributors
       representing approximately 28% of net sales during fiscal 1996.

    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.


                                      -17-

<PAGE>

                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996




NOTE B - INVENTORIES

The components of inventories are summarized as follows:

                                                          June 30,
                                                   --------------------------
                                                   1997                  1996
                                                   ----                  ----

                   Raw materials              $  692,368            $  644,520
                   Work-in-process               232,818               313,273
                   Finished goods                591,153               455,586
                                              ----------            ----------
                                                                  
                                              $1,516,339            $1,413,379
                                              ==========            ==========
                                                         

NOTE C - STOCK OPTIONS

    The Company has in effect a 1991 Stock  Option Plan and a 1994  Non-Employee
    Director Stock Option Plan which  authorize the grant of options to purchase
    350,000 shares 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 in fiscal 1997 to
    the pro forma amounts  indicated  below. Pro forma amounts for 1997 and 1996
    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.

                                        1997         1996
                                     ----------   -----------
                   Net earnings
                       As reported   $   12,121   $   124,472
                       Pro forma     $    2,087   $   124,472
                   Per share
                       As reported   $     0.01   $      0.06
                       Pro forma     $     0.00   $      0.06
                                                
    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 1996):  no
    expected  dividends;  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.  The  remaining  options to
    purchase 40,000 shares are exercisable over a ten-year period.
    Options for 20,000 shares expired in May 1996.


                                      -18-
<PAGE>


                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996



NOTE C - STOCK OPTIONS (CONTINUED)

    A summary of the status of the  Company's  stock options  plans,  along with
    grants to non-employee directors prior to the 1994 Plan, as of June 30, 1997
    and 1996,  and changes  during the years  ending on those dates is presented
    below.

<TABLE>
<CAPTION>
                                                   1997                1996
                                            ------------------   ------------------
                                                      WEIGHTED             WEIGHTED
                                                      AVERAGE              AVERAGE 
                                                      EXERCISE             EXERCISE
                                            SHARES     PRICE     SHARES     PRICE  
                                            ------     -----     ------     -----  
<S>                                         <C>        <C>      <C>        <C>     
Outstanding at beginning of year            231,000    $0.98    306,000    $   1.00
Granted                                      90,000     0.90       --       --
Exercised                                   (50,000)    0.93       --       --
Canceled                                    (46,000)    0.85    (75,000)       1.04
                                            225,000    $0.98    231,000    $   0.98
                                            -------    -----    -------    --------
Weighted average fair value of options                       
    granted during the year                            $0.65               $--
</TABLE>

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

    The following information applies to options outstanding at June 30, 1997:

       Range of exercise prices                             $0.81-$1.19
       Options outstanding                                      225,000
       Weighted average exercise price                            $0.98
       Weighted average remaining contractual life (years)            9
       Options exercisable                                      195,000
       Weighted average exercise price                            $0.98


NOTE D - INCOME TAXES

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

                                                    June 30,
                                              -------------------
                                              1997           1996
                                              ----           ----
          Current
              Federal                      $   11,000     $    53,000
              State                             5,000           8,000
          Deferred                             (3,000)        (17,000)
                                           ----------     -----------

                                           $   13,000     $    44,000
                                           ==========     ===========

                                      -19-
<PAGE>

                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996


NOTE D - INCOME TAXES (CONTINUED)

    The tax effects of  temporary  differences  which give rise to deferred  tax
    assets (liabilities) are summarized as follows:
                                                       June 30,
                                                 -------------------
                                                 1997           1996
                                                 ----           ----
          Deferred tax assets (liabilities)
              Inventory capitalization        $   15,500     $    20,000
              Vacation accrual                     8,500           7,000
              Trade receivables                    3,000           4,000
              Depreciation                        (7,000)        (14,000)
                                              ----------     -----------
                                                  20,000          17,000
          Valuation allowance                        -               -
                                              ----------     ---------

                 Net deferred tax asset       $   20,000     $    17,000
                                              ==========     ===========

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

                                                           June 30,
                                                  -------------------------
                                                     1997           1996
                                                  ----------     ----------

          Federal statutory rate                       34.0%           34.0%
          State taxes, net of Federal benefit           6.5             4.7
          Amortization of goodwill                     13.2             6.0
          Effect of graduated Federal tax rates       (11.9)           (4.9)
          Change in valuation allowance                 -             (10.1)
          Other, net                                    9.9            (3.6)
                                                  ---------      ----------

                                                       51.7%           26.1%
                                                  =========      ==========


NOTE E - ACCRUED LIABILITIES

    Accrued liabilities are summarized as follows:

                                                     June 30,
                                               -------------------
                                               1997           1996
                                               ----           ----

          Payroll and employee benefits     $   80,934     $    75,017
          Profit-sharing contributions          49,589          50,709
          Accrued professional fees             36,000          35,000
          Other                                  5,357          13,478
                                            ----------     -----------

                                            $  171,880     $   174,204
                                            ==========     ===========


                                      -20-

<PAGE>


                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996



NOTE F - EMPLOYEE BENEFIT PLANS

    The Company maintains a profit-sharing  plan which covers  substantially all
    employees.  Annual contributions,  which are determined at the discretion of
    the Board of  Directors,  were  $49,589 in fiscal 1997 and $50,709 in fiscal
    1996.

    The  Company  also   maintains  a  401(k)   retirement   plan  which  covers
    substantially   all   employees   and   provides  for   voluntary   employee
    contributions  with  employer  matching   contributions  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 1996.


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  approximate  minimum  rental
    commitment under this lease, at June 30, 1997, is summarized as follows:

       Year ending June 30,

            1998                                    $  116,000
            1999                                        87,000
                                                    ----------
                                                    $  203,000
                                                    ==========

    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 $167,000 for fiscal 1997 and 1996, 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 received  $94,711 in fiscal 1997, is receiving a salary of $150,000
    per annum since July 1, 1997 and may receive bonuses in fiscal 1998 if sales
    reach certain levels.

    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 $75,000 for fiscal 1997 and 1996,  respectively.
    The Company is also obligated  pursuant to a second royalty agreement to pay
    10% of annual sales of certain  other  products.  Payments  were $27,000 and
    $13,000 for fiscal 1997 and 1996, respectively.

                                      -21-
<PAGE>

                                 METRO TEL CORP.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                             JUNE 30, 1997 AND 1996


NOTE H - EXPORT SALES

    Export  sales were  approximately  $242,000  and $257,000 in fiscal 1997 and
1996, respectively.



                                      -22-
<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,  64, 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,  43, 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,  72, 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,  74,  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,  59, 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 November 5, 1997) 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:

           Howard  Perera,   45,  has  served  as  the  Company's   Director  of
Engineering, engaged in the design and development of new products since joining
the Company in September


                                      -23-

<PAGE>



1993.  For  approximately  five years prior to joining the Company,  Mr.  Perera
served as a product manager for DCM Corp.

           Jon D. Robinette, 40, 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 1997 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 1997 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 1997 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

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


                                      -24-

<PAGE>



               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.

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, Lloyd Frank and
               Michael Michaelson,


                                      -25-

<PAGE>



               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, 1997.  Following the
close of the fiscal year,  the Company filed a Current  Report on Form 8-K dated
(Date of earliest event reported)  August 4, 1997 reported Item 5 (Other Events)
and Item 7. No financial statements were filed with that Report.



                                      -26-

<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 26, 1997

                                                 By: 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.


          SIGNATURE                    CAPACITY                  DATE
          ---------                    --------                  ----

/s/ VENERANDO J. INDELICATO        President, Treasurer     September 26, 1997
---------------------------        (Principal Executive,
Venerando J. Indelicato            Financial and Accounting
                                   Officer) and Director


/s/ MICHAEL EPSTEIN                Director                 September 26, 1997
---------------------------
Michael Epstein


/s/ LLOYD FRANK                    Director                 September 26, 1997
---------------------------
Lloyd Frank


/s/ MICHAEL MICHAELSON             Director                 September 26, 1997
---------------------------
Michael Michaelson



                                      -27-

<PAGE>



                                  EXHIBIT INDEX
                                  -------------

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

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).

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).



                                      -28-

<PAGE>



*10(b)(2)+        Letter agreement dated August 29, 1996 between the Company and
                  Richard A. Wildman.

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,  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.



                                      -29-