U. S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                   FORM 10-KSB

            [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
  
            For the fiscal year ended December 31, 1997

            [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

             For the transition period from ________ to __________
                         Commission file number 0-439

                       American Locker Group Incorporated
 ------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

               Delaware                               16-0338330
------------------------------------------------------------------------------
             (State or other jurisdiction of      (I.R.S. Employer
             incorporation or organization)       Identification No.)

        608 Allen Street, Jamestown, New York                     14702-1000
 ------------------------------------------------------------------------------
         Address of principal executive offices)                 (Zip Code)

Issuer's  telephone number  1-716-664-9600  Securities  registered under Section
12(b) of the Exchange Act:

Title of each class              Name of each exchange on which registered

           NONE

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock Par Value $1.00 Per Share
 ------------------------------------------------------------------------------
                                (Title of class)

      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 is not 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 the Form 10-KSB
or any amendment to this Form 10-KSB. [X]

      State issuer's revenues for its most recent fiscal year.  $29,295,533.


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<PAGE>


      Issuers  aggregate market value of the voting stock held by non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked prices of such stock, as of March 13, 1998: $17,110,899.

      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest  practicable  date:  604,695 shares common stock
($1.00 par value) as of March 13, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the definitive  Proxy  Statement for the Annual  Stockholders'
Meeting to be held May 19, 1998, are incorporated by reference into Part III.

      Transitional Small Business Disclosure Form (check one): / / Yes   /X/  No




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<PAGE>




PART I

ITEM 1.  DESCRIPTION OF BUSINESS

American Locker Group  Incorporated  (the "Company") is engaged primarily in the
sale and rental of coin, key and electronically  controlled checking lockers and
related locks and the sale of plastic  centralized mail and parcel  distribution
lockers.  The key controlled  checking  lockers are sold to the recreational and
transportation industries, bookstores, military posts, law enforcement agencies,
libraries and for export. The electronically controlled lockers are sold for use
as secure storage in the business environment and the electronically controlled,
coin  operated  lockers are sold for use in  transportation  industry  and other
uses. The plastic centralized mail and parcel  distribution  lockers are sold to
the United States Postal Service ("USPS") for use in centralized mail and parcel
delivery in new housing and industrial developments.

The Company is an engineering,  assembling and marketing  enterprise  which also
manufactures its own mechanical locks for use in its products.

The Company was incorporated on December 15, 1958, as a subsidiary of its former
publicly-owned  parent.  In April 1964, the Company's shares were distributed to
the   stockholders  of  its  former  parent,   and  it  became  a  publicly-held
corporation. From 1965 to 1989, the Company acquired and disposed of a number of
businesses including the disposition of its original voting machine business.

One of the Company's  subsidiaries is a party to a Manufacturing  Agreement with
Signore,  Inc.,  formerly a wholly owned  subsidiary of the Company,  to furnish
fabricating,  assembly  and  shipping  services.  The  Agreement,  which  became
effective January 1, 1990, has been extended and now is for a term expiring June
30, 2000. The Agreement provides that the cost to the Company for these services
be equal to Signore's standard cost divided by 80%.

BUSINESS SEGMENT INFORMATION

The Company,  including its foreign subsidiary, is engaged in one business: sale
and rental of coin and key or  electronically  controlled  checking  lockers and
locks and the sale of plastic centralized mail and parcel distribution lockers.

The Company has  developed a  polycarbonate  all-weather  parcel  locker for the
United  States  Postal  Service,  and has shipped over 144,000 of the units from
March 1989 through March 10, 1998. Cluster Box Units, i.e.  (combination  letter
box - CBU),  are plastic  parcel and letter units for the United  States  Postal
Service which has been approved and field tested.  In November 1994, the Company
negotiated  a contract to sell Type Three CBUs in quantity to the United  States
Postal  Service.  Type One and Type Two CBU's are  approved  and included in the
current contract. As of March 10, 1998, Cluster Box Units with aggregate invoice
prices in excess of  $39,000,000  have been shipped to the United  States Postal
Service  pursuant to the 1994 contract and subsequent  contracts.  Components of
these  units are made by  outside  vendors  and the units are  assembled  by The
Company's  wholly-owned  subsidiary,  American  Locker  Security  Systems,  Inc.
(ALSSI).  The units  are sold  directly  by ALSSI to the  United  States  Postal
Service.


The  checking  lockers are  fabricated  by Signore  Inc. and are marketed in the
United  States by ALSSI.  Lockers for the Canadian  market are  manufactured  by
Signore Inc. with locks  supplied from ALSSI.  Lockers are marketed in Canada by
the  Canadian  Locker  Company,   Ltd.  ("Canadian   Locker"),   a  wholly-owned
subsidiary.  These  sales are made  outright,  through  salaried  employees  and
distributors,   to  customers  who  need  storage  facilities  requiring  a  key
controlled lock system in the recreational,  governmental and institutional type
industries. 


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<PAGE>

Canadian  Locker also owns and operates  coin  operated  lockers in air, bus and
rail  terminals  and retail  locations in Canada.  ALSSI  manufactures  the lock
system, which is coin or key controlled and operated, for use in lockers sold by
ALSSI  and  Canadian  Locker.   ALSSI  also  provides  nationwide  and  Canadian
maintenance and repair services with respect to coin operated lockers previously
sold by ALSSI. The Company has developed a coin operated baggage cart system and
is operating the system at one major Canadian airport, and has sold several cart
systems for use in American airports.

Additional   information  with  respect  to  business  segment  data,  including
significant  customers,  is  disclosed  in Note 10 of the  financial  statements
included in Item 7 of this Form 10-KSB.

COMPETITION

While the Company is not aware of any  reliable  trade  statistics,  it believes
that its subsidiaries,  ALSSI and Canadian Locker are the dominant  suppliers of
key controlled  checking lockers in the United States and Canada.  However,  the
Company faces more active competition from several other manufacturers of locker
products sold to the United States Postal Service and other purchasers.

RAW MATERIALS

Present  sources of supplies and raw materials  incorporated  into the Company's
metal and plastic lockers and locks are generally  considered to be adequate and
are  currently  available  in  the  market  place.  The  Company's  supplier  of
polycarbonate plastic which is used in the parcel lockers and CBU's entered this
market in March 1992 and is presently  supplying  this raw material  which meets
strict specifications  imposed by the United States Postal Service. In the event
the present supplier  declines to continue to supply this material,  the Company
would be required to seek an alternate source of supply.

The Company's  metal lockers are  manufactured  by Signore Inc.  pursuant to the
Manufacturing Agreement, except for the locks which are manufactured by ALSSI.

PATENTS

The Company owns a number of patents, none of which it considers material to the
conduct of its business.



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<PAGE>



EMPLOYEES

The Company  actively  employed 120  individuals as of December 31, 1997, in its
businesses of whom 41 are in Canada.  The Company  considers its relations  with
its  employees  to  be  satisfactory.   None  of  the  Company's  employees  are
represented by a union.

RESEARCH AND DEVELOPMENT

The Company engages in research and development  activities  relating to new and
improved  products  as an  incident of its normal  manufacturing  operations  in
conjunction with the continuing  operations.  It expended $48,735,  $44,634, and
$148,527  in 1997,  1996  and  1995,  respectively,  for  such  activity  in its
continuing businesses, which does not include new product development costs.

COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

Based on the  information  available to it,  except as noted below,  the Company
believes  that  it is in  compliance  with  present  federal,  state  and  local
environmental laws and regulations.

In 1994,  the Company  received  correspondence  from the owner of certain  real
property  which  was  sold  by the  Company  in 1978  and  which  was  allegedly
contaminated at the time of sale. The correspondence sought, among other things,
contributions  for past and future  remediation  costs.  The  Company has denied
liability with respect to this matter. No developments  occurred with respect to
this matter in 1997.

In July 1994,  the Company was notified by the Department of Law of the State of
New York that the State of New York  believes  that the  Company,  Bristol-Myers
Squibb Company,  Inc.,  General Electric,  Inc., Pass & Seymour,  Inc. and R. E.
Dietz are liable for past and future investigation and remediation costs related
to the site in Pompey, New York,  previously operated by Solvent Savers, Inc. as
a spent solvent  recovery  facility.  In 1997,  the Company and the State of New
York entered into an agreement  whereby the State  released the Company from any
and all claims for any and all civil liability  relating to the site. In return,
the Company  contributed  $90,000 to reimburse the state for a percentage of its
response costs related to the site. The Company's  insurance carrier at the time
of the alleged  incident  agreed to pay $25,000 of the  settlement  sum and also
bore the legal costs of the Company's defense.

GENERAL

Backlog of orders is not  significant  in the  Company's  business as  shipments
usually are made shortly after orders are received.  The Company's  sales do not
have marked seasonal variations.

During 1997,  1996 and 1995,  one customer,  the United  States Postal  Service,
accounted  for 69.2%,  61.8% and 61.2% of net sales,  respectively.  The loss of
this  customer,  or a  reduction  in its  orders,  could  adversely  affect  the
Company's operations and financial results.



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EXECUTIVE OFFICERS OF THE COMPANY

                                                                  YEAR FIRST
                                                                  ASSUMED
    NAME                    AGE   OFFICE HELD WITH COMPANY        POSITION
------------------------------------------------------------------------------

Harold J. Ruttenberg        83    Chairman of the Board,          1973
                                  Chief Executive Officer,
                                  and Treasurer

Roy J. Glosser              37    President and Chief             1996
                                  Operating Officer


Mr. H. J.  Ruttenberg  has been  employed  in his  positions  for more than five
years, and Mr. Glosser assumed his position in May 1996. Prior to that date, Mr.
Glosser  served as Vice President - Operations of the Company since 1995 and has
been employed by the Company since 1992 in operations and product development.

There  are no  arrangements  or  understandings  pursuant  to  which  any of the
officers were elected as officers, except for an employment contract between the
Company and Roy J. Glosser.  Except as provided in such employment contract, all
officers  hold  office for one year and until their  successors  are elected and
qualified;  provided,  however,  that any officer is subject to removal  with or
without cause, at any time, by a vote of the majority of the Board of Directors.

There have been no events under any bankruptcy act, no criminal  proceedings and
no  judgments  or  injunctions  material  to the  evaluation  of the ability and
integrity of any executive officer during the past five years.




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<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

The location and  approximate  floor space of the  Company's  principal  plants,
warehouses and office facilities are as follows (* indicates leased facility):

                                                     APPROXIMATE
                                                     FLOOR SPACE
LOCATION           SUBSIDIARY                        IN SQ. FT.    PRODUCTS
--------           ---------                         -----------   --------

Jamestown, NY      Principal Executive Office        37,000 *      Office space/
                   American Locker Company, Inc.                   Assembly and
                   and American Locker Security                    Warehouse
                   Systems, Inc.

Jamestown, NY      American Locker Security          21,300 *      Assembly and
                   Systems, Inc.                                   Warehouse

Pittsburgh, PA     Executive Office                   1,000 *      Office space

Ellicottville, NY  American Locker Security          12,800        Lock manufac-
                   Systems, Inc. - Lock Shop                       turing 
                                                                   service and
                                                                   repair

Toronto,           Canadian Locker Company, Ltd.      4,000 *      Coin-
  Ontario                                                          operated
                                                                   lockers and
                                                                   locks

Toronto,
  Ontario          Canadian Locker Company, Ltd.      3,000 *      Warehouse
                                                     ------
                                   TOTAL             79,100
                                                     ======


The Company  believes that its facilities which are of varying ages and types of
construction and the machinery and equipment utilized in such plants are in good
condition and are adequate for its presently  contemplated needs. All facilities
are leased except for the Ellicottville facility. The leases on these properties
terminate at various times from 1998 through 2001.

ITEM 3.  LEGAL PROCEEDINGS

Four female former  employees of the Company have alleged in suits entitled Derr
et al. v. American Locker Group,  Inc.,  94-CV-0515S(M),  (US District Court for
Western  District of New York) that they were the victims of sex  discrimination
in their terminations and/or compensation and seeking unspecified  damages.  The
Company has filed an answer denying all charges.  Discovery is completed and the
Company  has filed a Motion for Summary  Judgment  on all counts.  The Motion is
under  consideration by the Court. The Company intends to vigorously defend this
matter.

See "Item 1.  Business - Compliance with Environmental Laws and Regulations."

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<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the security  holders,  by means of
solicitation of proxies or otherwise, during the fourth quarter of 1997.



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<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  shares of Common Stock (Par Value $1.00 per share) are not listed
on any exchange,  but are traded on the  over-the-counter  market and quotations
are reported by the National Association of Security Dealers, Inc. through their
Automated  Quotation System (NASDAQ) on the National Market System.  The trading
symbol is ALGI.  The  following  table  shows the range of the low and high sale
prices for each of the calendar quarters indicated.

                               PER COMMON SHARE
                                 MARKET PRICE

                                                            DIVIDEND
   1996                   HIGH             LOW              DECLARED
   ----                   ----             ----             --------

First Quarter             $13.50          $ 9.75             $0.00
Second Quarter             13.75           12.00              0.00
Third Quarter              15.75           10.75              0.00
Fourth Quarter             15.75           13.00              0.00
                                                            ------
Total                                                        $0.00

                                                            DIVIDEND
   1997                  HIGH             LOW               DECLARED
   ----                  ----             ----              --------

First Quarter            $14              $13               $0.00
Second Quarter            14.25            11.25             0.00

Third Quarter             24               12                0.00
Fourth Quarter            28               18.25             0.00
                                                            -----
Total                                                       $0.00


As of March 13, 1998, the Company had 1,444 security holders of record.

By agreement with its principal lender,  the Company's ability to declare future
dividends is restricted. See Note 3 to the financial statements included in Item
7 of this Form 10-KSB.



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<PAGE>


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

RESULTS OF OPERATIONS - 1997 COMPARED TO 1996

In 1997,  consolidated  sales of  $29,295,533  increased  30% over 1996 sales of
$22,517,589.  Income  before  income  taxes rose 90% to  $3,454,508  compared to
$1,819,184 in 1996. Sales of the Company's  plastic lockers to the United States
Postal Service (USPS)  increased 51% from  $12,658,767 in 1996 to $19,112,209 in
1997.  Revenues from the Company's other,  non-plastic locker products increased
3% from $9,858,822 in 1996 to $10,183,324 in 1997.

Consolidated cost of sales as percentage of sales decreased slightly to 70.0% in
1997 from 70.1% in 1996. Gross margin gains due to higher volume efficiencies on
Cluster Box Units (CBU's) were mostly offset by price concessions to the USPS.

The Company's present contract with the USPS covers all three types of CBU's and
the Outdoor  Parcel Locker (OPL).  The contract was awarded March 27, 1996 for a
period of one year expiring April 14, 1997. On April 16, 1997 the USPS exercised
the first of four  one-year  options to extend the  contract to April 14,  1998.
During 1997, the Company delivered  approximately  16,000 CBU's (all three types
combined) and approximately  16,000 OPL's. We anticipate that OPL shipments will
decline as the USPS buys more CBU's, all of which have parcel compartments built
in.  As  previously  announced,  the USPS  instituted  procurement  policy  that
strictly  limits  purchase  of  NDCBU's  (the  steel  predecessor  to plastic or
aluminum CBU's) in relation to the new CBU's.  Fourth quarter 1997 CBU shipments
increased dramatically due to execution of this policy and the Company's ability
to maintain its dominant market share position.

The USPS has advised the Company that it will exercise the second of four option
years extending the contract to mid-April 1999.  Prices and quantities under the
contract  renewal  have  not  yet  been  finalized  and  are  still  subject  to
negotiation.  In February  1998,  both  aluminum CBU  competitors  substantially
lowered  their  prices to  slightly  below our current  prices.  The Company has
advised the USPS in previous  negotiating  meetings that the Company's policy is
to lower our selling  prices  based on cost  reductions  that we intend to share
with the USPS.  While the effect of this price reduction on the Company's market
share is  undetermined  at present,  the Company  believes  its CBU product line
continues to represent the best value when all factors, including price, quality
of design and construction, long term durability and service are considered.

Selling, administrative and general expenses of $5,119,905 during 1997 increased
2.6% from the  $4,989,497 in 1996. The increase in selling,  administrative  and
general  expenses relates to increased  freight and selling expenses  associated
with the increased shipment volume.

Interest income  increased to $51,270 in 1997 compared to $43,270 in 1996 due to
improvements in daily cash management  procedures and higher balances  available
for overnight investment. Total other expense was $56,762 in 1997 as compared to
other income of $248,605 in 1996.

Interest expense decreased to $181,678 in 1997 from $208,827 recorded in 1996.


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<PAGE>


RESULTS OF OPERATIONS 1996 TO 1995

In  1996,  consolidated  sales  of  $22,517,589  decreased  approximately  5% as
compared to 1995 sales of $23,677,940 and the Company's net income  decreased by
36%. Sales of the Company's  plastic lockers  decreased from $13,362,573 in 1995
to $12,658,767 in 1996.  Revenues from the Company's other,  non-plastic  locker
products decreased 4.4% from $10,315,367 in 1995 to $9,858,822 in 1996.

Consolidated cost of sales as percentage of sales increased to 70.1% compared to
68.4% in 1995,  providing a 1.7% decrease in gross margin.  The decrease relates
to the lower volumes and increased  depreciation expense resulting from the Type
One and Type Two CBU tooling.

As stated  earlier,  the  Company's  present  contract with the USPS was awarded
March 27, 1996 and covers OPL's and all three types of CBU's. Under the terms of
this contract, the Company delivered  approximately 6,800 CBU's and 12,400 OPL's
through December 31, 1996.

Selling, administrative and general expenses of $4,989,497 during 1996 increased
2.6% from the  $4,861,477 in 1995. The increase in selling,  administrative  and
general  expenses is the result of  increased  bad debt  expense,  group  health
insurance and was partially offset by lower compensation expense.

Interest  income in 1996 decreased from 1995 due to a decrease on the balance of
note receivable during 1996.

Other income of $248,605 in 1996 increased from the $244,769 recorded in 1995.

Interest expense  increased 25.6% in 1996 from the $166,289 recorded in 1995 due
to increases in the average borrowings  outstanding  during the year,  resulting
from the $1,000,000  borrowing in March 1996 of long-term  debt, and the average
borrowing rate experienced during 1996.

LIQUIDITY AND SOURCES OF CAPITAL

The Company's  liquidity is reflected in the ratio of current  assets to current
liabilities or current ratio and its working capital. The current ratio was 2.90
to 1 and 2.47 to 1 at the end of 1997 and 1996,  respectively.  Working capital,
or the excess of current  assets over current  liabilities,  was  $6,558,095  at
December  1997 and  $5,165,135  at December  31,  1996.  The increase in working
capital resulted primarily from the increased business activity with the USPS in
1996 and 1997. In 1997, the Company's  operations  generated  $1,461,266 in cash
from operating activities.  Principally, operating cash was utilized to fund the
increase in inventory  $296,860,  to pay income taxes,  to meet  scheduled  debt
payments,  to purchase equipment and to repurchase stock. The Company also has a
$3,000,000  line-of-credit  available to assist in satisfying  future  operating
cash needs, if required.  However, the Company anticipates that it will generate
positive cash flow from operations in 1998.

In 1997, from January through  August,  the Company  continued to make principal
payments on the term loan at the rate of $50,000 per month.  In August 1997, the
outstanding balance on this



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<PAGE>


loan  was  paid in full  using  the  proceeds  of a new  term  loan in  original
principle  amount of  $1,000.000,  payable at $16,667  per month plus  interest.
Additionally,  a second  term loan for  $2,315,000  payable at $38,583 per month
plus interest,  was instituted in August 1997. Proceeds from this loan were used
for the repurchase of a large block of Company  stock.  At December 31, 1997 the
outstanding balances on these loans were $933,333 and $2,160,667,  respectively.
Also at December 31, 1997,  the Company has an  outstanding  balance of $850,000
under a  $3,000,000  line-of-credit  with  its  principal  bank.  This  $850,000
borrowing  was a yearend  overnight  borrowing  to allow for a cash  balance  in
excess of  $1,000,000.  The  $850,000 was repaid on the first day of business in
January 1998.

The Company's  policy is to maintain  modern  equipment  and adequate  capacity.
During  1997,  1996 and  1995,  the  Company  expended  $520,000,  $234,000  and
$1,232,600,  respectively,  for capital additions.  Capital expenditures in 1997
and 1996 were financed  principally from operations.  In addition,  1998 capital
expenditures are also expected to be financed from operations.

IMPACT OF INFLATION AND CHANGING PRICES

Although  inflation  has  slowed  in recent  years,  it is still a factor in the
economy and the Company  continues to seek ways to mitigate  its impact.  To the
extent  permitted by competition,  the Company passes  increased costs on to its
customers by  increasing  sales prices over time.  The Company will  continue to
find ways to control the  administrative  overhead necessary to successfully run
the  business.  By  controlling  these  costs,  the Company  can  continue to be
competitively   priced  with  other  top  quality   locker   manufacturers   and
distributors.

The Company has used the LIFO method of  accounting  for its  inventories  since
1974.  This method  matches  current  costs with current  revenues and during an
inflationary  period,  reduces  reported  income but improves cash flow due to a
reduction of taxes based on income.

IMPACT OF NEW ACCOUNTING STANDARDS

In June 1997, the Financial  Accounting  Standards  Board issued  Statement 130,
"Reporting  Comprehensive  Income."  Statement 130 establishes new rules for the
reporting  and  display of  comprehensive  income and its  components;  however,
adoption  in  1998  will  have  no  impact  on  the   Company's  net  income  or
shareholders'  equity.  Statement 130 requires the foreign currency  translation
adjustment,  which currently is reported in shareholders' equity, to be included
in other comprehensive income and the disclosure of total comprehensive  income.
If the Company  adopted  Statement 130 for the year ended December 31, 1997, the
total  of  other  comprehensive  income  items,   reported  as  a  component  of
shareholders' equity, and comprehensive income (which includes net income) would
be $(34,493) and $2,077,982, respectively, and would be displayed separately.

In June 1997, the Financial  Accounting  Standards  Board issued  Statement 131,
"Disclosure About Segments of an Enterprise and Related  Information,"  which is
effective for years beginning after December 15, 1997. Statement 131 establishes
standards for the way that public business  enterprises report information about
operating  segments  in annual  financial  statements  and  requires  that those
enterprises report selected information about operating segments in interim


                                       12
<PAGE>


financial reports.  It also establishes  standards for related disclosures about
products and services,  geographic areas, and major customers.  The Company will
adopt the new requirements retroactively during 1998. Management does not expect
that the  adoption  of this  statement  will  result  in the  Company  reporting
additional segments.

ADDRESSING THE YEAR 2000 ISSUE

The Year  2000  issue  relates  to the fact  that many  computers  and  computer
programs support only two digits to specify a year in the date field. Therefore,
if not corrected,  these systems may fail or create erroneous results in dealing
with matters which refer to dates after December 31, 1999.

The Company is aware of the issues and is  actively  pursuing a course of action
to address  them.  The  Company's  basic  strategy  is to replace  its  existing
computer  system  with one that is Year 2000  compatible.  The vast  majority of
hardware  (personal  computers and local area network  devices) has already been
purchased  and  installed.  The  Company  plans to select  and  install  the new
operating system (software) prior to the end of 1998.

The Company is not able to project,  at this time, the ultimate cost of its Year
2000 project.  However,  the Company does not expect that the expense to address
the Year 2000 issue will have a material effect on 1998 operations.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

Forward-looking   statements  in  this  report,  including  without  limitation,
statements   relating   to  the   Company's   plans,   strategies,   objectives,
expectations,  intentions  and adequacy of  resources,  are made pursuant to the
Safe Harbor Provisions of the Private Securities  Litigation Reform Act of 1995.
Investors are cautioned that such  forward-looking  statements involve risks and
uncertainties  including  without  limitation the  following:  (i) the Company's
plans,  strategies,  objectives,  expectations,  and  intentions  are subject to
change at any time at the  discretion of the Company,  (ii) the Company's  plans
and results of operations  will be affected by the  Company's  ability to manage
its growth and inventory, and (iii) other risks and uncertainties indicated from
time  to  time  in the  Company's  filings  with  the  Securities  and  Exchange
Commission.




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<PAGE>


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                        Report of Independent Auditors


Board of Directors and Stockholders
American Locker Group Incorporated and Subsidiaries

We have audited the accompanying  consolidated balance sheets of American Locker
Group  Incorporated  and  Subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the  three  years in the  period  ended  December  31,  1997.  These
financial  statements are the  responsibility  of the management of the Company.
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 consolidated  financial position of American Locker
Group  Incorporated  and  Subsidiaries  at December  31, 1997 and 1996,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted accounting principles.



                                    /s/Ernst & Young, LLP

Buffalo, New York
February 18, 1998



                                       14
<PAGE>

<TABLE>
<CAPTION>

             American Locker Group Incorporated and Subsidiaries

                         Consolidated Balance Sheets


                                                            DECEMBER 31
                                                         1997         1996
                                                   -----------------------------
<S>                                                <C>              <C>    
ASSETS
Current assets:
  Cash and cash equivalents                         $  1,154,045    $  1,229,222
  Accounts and notes receivable, less allowance
   for doubtful accounts of $438,784 in 1997 and       4,519,710       3,363,277
   $386,309 in 1996
  Inventories                                          3,636,528       3,339,668
  Prepaid expenses                                        89,656          97,917
  Prepaid federal, state and foreign income taxes         32,515          28,986
 Deferred income taxes                                   576,861         619,096
                                                         -------         ------- 
Total current assets                                  10,009,315       8,678,166

Property, plant and equipment:
  Land                                                       500             500
  Buildings                                              511,649         505,970
  Machinery and equipment                              8,004,338       7,617,871
                                                       ---------       ---------
                                                       8,516,487       8,124,341
  Less allowances for depreciation and 
    amortization                                      (7,267,199)      6,782,429
                                                      ----------       --------- 
                                                       1,249,288       1,341,912
-
Deferred income taxes                                      5,122            --
                                                           -----       ---------        
Total assets                                         $11,263,725     $10,020,078
                                                     ===========     ===========
                                               

</TABLE>

                                       15
<PAGE>


<TABLE>
<CAPTION>


             American Locker Group Incorporated and Subsidiaries

                         Consolidated Balance Sheets


                                                          DECEMBER 31
                                                      1997          1996
                                                  -----------------------------
<S>                                               <C>              <C>    
LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
  Demand note payable                             $    850,000     $  1,125,000
   Accounts payable:
   Trade                                               737,467          660,202
   Related party                                       434,565          381,196
                                                       -------          -------
                                                     1,172,032        1,041,398
  Commissions, salaries, wages and taxes
    thereon                                            330,956          298,671
  Other accrued expenses                               435,232          447,962
  Current portion of long-term debt                    663,000          600,000
                                                       -------          -------
 Total current liabilities                            3,451,220       3,513,031

Deferred income taxes                                     --             44,580

Long-term obligations:
  Long-term debt                                     2,431,000          700,000
  Pension benefits                                     322,521          271,690
  Postretirement benefits                              139,839          132,630
                                                       -------          -------  
                                                     2,893,360        1,104,320

Stockholders' equity:
  Common stock, $1 par value:
   Authorized shares -- 4,000,000
   Issued and outstanding shares --
     601,445 in 1997
     and 800,024 in 1996                               601,445          800,024
  Other capital                                           --          1,027,527
  Retained earnings                                  4,466,780        3,645,183
  Foreign currency translation
    adjustment                                        (149,080)        (114,587)
                                                      --------         --------  
Total stockholders' equity                           4,919,145        5,358,147
                                                     ---------        --------- 
Total liabilities and stockholders' equity        $ 11,263,725     $ 10,020,078
                                                  ============     ============
                                                                   
</TABLE>


See accompanying notes.




                                       16
<PAGE>

<TABLE>
<CAPTION>

             American Locker Group Incorporated and Subsidiaries

                      Consolidated Statements of Income


                                      YEAR ENDED DECEMBER 31
                                   1997         1996         1995
                          --------------------------------------------
<S>                       <C>             <C>             <C>
Net sales                 $ 29,295,533    $ 22,517,589    $ 23,677,940
Cost of products sold       20,533,950      15,791,956      16,207,181
                            ----------      ----------      ----------
                             8,761,583       6,725,633       7,470,759
Selling, administrative
  and general expenses       5,119,905       4,989,497       4,861,477
                             ---------       ---------       ---------

                             3,641,678       1,736,136       2,609,282

Interest income                 51,270          43,270          59,716
Other (expense)
   income - net                (56,762)        248,605         244,769
Interest expense              (181,678)       (208,827)       (166,289)
                              --------        --------        -------- 
Income before income
   taxes                     3,454,508       1,819,184       2,747,478
Income taxes                 1,342,033         674,352         956,909
                             ---------         -------         -------
Net income                 $ 2,112,475     $ 1,144,832     $ 1,790,569
                           ===========     ===========     ===========






Earnings per share of
 common stock:
  Basic                         $2.90           $1.41           $2.12
                                -----           -----           -----
                                    
  Diluted                       $2.82           $1.39           $2.08
                                -----           -----           -----
                                      
Dividends per share 
of common stock:                $0.00           $0.00           $0.00
                                =====           =====           =====
                                      

See accompanying notes.


</TABLE>




                                       17
<PAGE>



             American Locker Group Incorporated and Subsidiaries

               Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>

                                                                           FOREIGN
                                                                           CURRENCY         TOTAL
                              COMMON          OTHER         RETAINED       TRANSLATION      STOCKHOLDERS'
                              STOCK           CAPITAL       EARNINGS       ADJUSTMENT       EQUITY
                            ---------------------------------------------------------------------------

<S>                            <C>            <C>            <C>            <C>            <C>                 
Balance at January 1, 1995     $   858,876    $ 1,571,970    $   709,782    $  (134,977)   $ 3,005,651
  Net income                          --             --        1,790,569           --        1,790,569
  Foreign currency                    --             --             --           21,262         21,262
    translation
  Common stock purchased
    and retired (40,251            (40,251)      (313,165)          --             --         (353,416)
    shares)                    -----------    -----------    -----------    -----------    -----------

Balance at December
 31, 1995                          818,625      1,258,805      2,500,351       (113,715)     4,464,066
  Net income                          --             --        1,144,832           --        1,144,832
  Foreign currency                    --             --             --             (872)          (872)
   translation
  Common stock purchased
     and retired (18,601         
     shares)                       (18,601)      (231,278)          --             --         (249,879)
                                   -------       --------        --------        --------     -------- 

Balance at December 31, 1996       800,024      1,027,527      3,645,183       (114,587)     5,358,147
  Net income                          --             --        2,112,475           --        2,112,475
  Foreign currency                    --             --             --          (34,493)       (34,493)
   translation
  Common stock purchased
   and retired (198,579           
   shares)                        (198,579)    (1,027,527)    (1,290,878)          --       (2,516,984)
                                  --------     ----------     ----------        ---------   ---------- 

                      
Balance at December 31, 1997     $ 601,445      $   --       $4,466,780       $ (149,080)  $ 4,919,145
                                   =======      ========     ============     ============ ===========
                                                         
                           
</TABLE>


See accompanying notes.




                                       18
<PAGE>

<TABLE>
<CAPTION>

             American Locker Group Incorporated and Subsidiaries

                    Consolidated Statements of Cash Flows


                                                   YEAR ENDED DECEMBER 31

                                          1997               1996              1995
                                       --------------------------------------------------

OPERATING ACTIVITIES
<S>                                       <C>          <C>                  <C>    
Net income                              $ 2,112,475    $ 1,144,832          $ 1,790,569
Adjustments to reconcile net
  income to net cash provided
  by operating activities:
   Depreciation and amortization            600,632        622,392              404,006
   Loss (gain) on disposition of
     property, plant and equipment              490        (20,224)             (27,346)
   Deferred income taxes (credits)           (7,467)      (124,245)              46,000
   Retirement benefits                       50,831         39,106               58,042
   Postretirement benefits                    7,209          7,000                9,120
   Change in assets and liabilities:
     Accounts and notes receivable       (1,164,644)       461,028              384,683
     Inventories                           (296,860)      (564,015)            (670,019)
     Prepaid expenses                         7,603         46,090               43,541
     Accounts payable and accrued
       expenses                             154,526       (280,424)            (138,984)
     Income taxes                            (3,529)      (859,005)             811,101
                                             ------       --------              -------
Net cash provided by operating
   activities                             1,461,266        472,535            2,710,713

INVESTING ACTIVITIES
Purchase of property, plant
  and equipment                            (520,358)      (234,621)           (1,232,604)
Proceeds from sale of property,
  plant and equipment                         3,702         43,104               32,675
                                              -----         ------               ------


Net cash used in investing activities      (516,656)      (191,517)          (1,199,929)
                                         
FINANCING ACTIVITIES
Net (repayment) borrowings under
line of credit                             (275,000)      (275,000)             200,000

Additional borrowings                     3,315,000      1,000,000                 --
Debt repayments                          (1,521,000)      (600,000)            (600,000)
Common stock purchased and retired       (2,516,984)      (249,879)            (353,416)
                                         ----------       --------             -------- 

Net cash used in financing activities      (997,984)      (124,879)            (753,416)
Effect of exchange rate
 changes on cash                            (21,803)        (7,404)               7,434
                                            -------         ------                -----
Net (decrease) increase in cash             (75,177)       148,735              764,802
Cash and cash equivalents at
    beginning of year                     1,229,222      1,080,487              315,685
                                          ---------      ---------              -------
Cash and cash equivalents at
   end of year                          $ 1,154,045    $ 1,229,222          $ 1,080,487
                                        ===========    ===========          ===========
Supplemental cash flow information:
   Cash paid during the year for:
     Interest                           $   172,953    $   208,827          $   160,607
                                        ===========    ===========          ===========

   Income taxes paid                    $ 1,345,562    $ 1,650,823          $    59,684
                                        ===========    ===========          ===========

                                          

See accompanying notes.

</TABLE>



                                       19
<PAGE>



             AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              DECEMBER 31, 1997

 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION AND BUSINESS DESCRIPTION

The consolidated  financial  statements  include the accounts of American Locker
Group  Incorporated  and  its  subsidiaries  (the  Company),  all of  which  are
wholly-owned.  Intercompany  accounts and  transactions  have been eliminated in
consolidation.  The  Company  is  engaged  in  one  business:  coin  and  key or
electronically   controlled  metal  and  plastic  centralized  mail  and  parcel
distribution  lockers and locks. The Company sells to customers throughout North
America as well as internationally.

CASH AND CASH EQUIVALENTS

Cash includes currency on hand and demand deposits with financial  institutions.
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

INVENTORIES

Inventories  are  valued  principally  at the  lower  of  cost or  market,  cost
determined by the last-in, first-out method.

PROPERTIES AND DEPRECIATION

Property,  plant and equipment are stated at cost.  Provisions for  depreciation
have  been  computed  for   accounting   purposes  by  the   straight-line   and
declining-balance  methods  based on  estimated  useful  lives.  Provisions  for
depreciation have been computed for tax purposes under accelerated tax methods.

INCOME TAXES

The Company  accounts for income taxes in accordance with Statement of Financial
Accounting  Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under
SFAS 109,  deferred  income taxes are  recognized  for the tax  consequences  of
temporary  differences by applying enacted  statutory rates applicable to future
years to differences  between the financial  statement  carrying amounts and the
tax basis of  existing  assets  and  liabilities.  The effect of a change in tax
rates is recognized in the period that includes the enactment date.



                                       20
<PAGE>


             AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

In 1997, the Financial  Accounting Standards Board issued Statement of Financial
Accounting  Standards  No. 128,  "Earnings  per Share"  ("SFAS  128").  SFAS 128
replaced the  calculation  of primary and fully diluted  earnings per share with
basic and diluted earnings per share.  Unlike primary earnings per share,  basic
earnings  per share  excludes  any  dilutive  effects of options,  warrants  and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported fully diluted  earnings per share.  SFAS 128 did not impact
previously reported earnings per share.

FOREIGN CURRENCY

The assets and liabilities of the Company's foreign subsidiary are translated to
U.S.  dollars at current  exchange  rates.  Revenue  and  expense  accounts  are
translated  at  weighted  average  exchange  rates  prevailing  during the year.
Foreign currency gains and losses are included in determining net income for the
period in which the exchange rate changes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  amounts  of  cash  and  cash  equivalents,   accounts  and  notes
receivable, accounts payable, and accrued liabilities approximate fair value due
to the short-term maturities of these assets and liabilities. The interest rates
on substantially all of the Company's bank borrowings are adjusted  regularly to
reflect current market rates. Accordingly, the carrying amounts of the Company's
short-term and long-term borrowings also approximate fair value.

STOCK-BASED COMPENSATION

The  Company   accounts  for  stock  options   granted  under  its   stock-based
compensation  plan in  accordance  with the  intrinsic  value  based  method  of
accounting  as  prescribed  by  Accounting  Principles  Board  Opinion  No.  25,
"Accounting  for  Stock  Issued to  Employees"  ("APB  25"),  as  allowed  under
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation" ("SFAS 123"). Accordingly,  compensation cost for stock options is
measured as the excess,  if any, of the fair market value of the Company's stock
at the date of grant over the amount an employee must pay to acquire the stock.

USE OF ESTIMATES

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



                                       21
<PAGE>


             AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. INVENTORIES

Inventories consist of the following:
 
<TABLE>
<CAPTION>
                                                           DECEMBER 31
                                                        1997         1996
                                                  ---------------------------
 <S>                                                <C>           <C>  
Finished products                                  $ 1,041,732   $   982,888
Work-in-process                                      1,559,037     1,742,320
Raw materials                                        1,869,576     1,625,633
                                                     ---------     ---------
                                                     4,470,345     4,350,841
Less allowance to reduce to LIFO basis                (833,817)   (1,011,173)
                                                      --------    ---------- 

Net inventories                                    $ 3,636,528    $3,339,668
                                                   ===========    ==========
                                                   
</TABLE>

In 1996,  inventory  quantities  were reduced  resulting in liquidations in LIFO
inventory  quantities  carried at lower costs in prior years. The effect of this
liquidation  was to decrease  cost of products  sold and  increase net income by
approximately  $69,000 and $43,700  ($.05 per share).  No such LIFO  liquidation
occurred in 1997.

3. DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                            DECEMBER 31
                                         1997          1996
                                     ---------------------------
<S>                                     <C>          <C>    
Note    payable    to    bank,    
unsecured,   payable   through
August  31,  2002,  payable at
$38,583    per   month    plus
interest  at prime  plus  .25%
(8.75% at December 31, 1997)           $2,160,667    $   --

Note    payable    to    bank,
unsecured,   payable   through
August  31,  2002,  payable at
$16,667    per   month    plus
interest  at prime  plus  .15% 
(8.65% at December 31, 1997)              933,333        --

Note    payable    to    bank,
unsecured, payable $50,000 per
month plus  interest  at prime
plus .25%                                   --        1,300,000
                                       ---------      ---------
Total long-term debt                   3,094,000      1,300,000
Less current portion                     663,000        600,000
                                         -------        -------
Long-term portion                     $2,431,000     $  700,000
                                      ==========     ==========
                                  
</TABLE>

The  credit  agreement  underlying  the  notes  payable  to  bank  requires  the
maintenance of certain levels of net worth and working  capital and requires the
maintenance of a certain current ratio and ratio of liabilities to net worth. In
addition, the credit agreement has restrictions on the payment of dividends. The
Company was in compliance with these covenants at yearend.



                                       22
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. DEBT (CONTINUED)

Required  principal  payments  on  long-term  obligations  in each of the  years
through final maturity are as follows:

                            1998             $    663,000
                            1999                  663,000
                            2000                  663,000
                            2001                  663,000
                            2002                  442,000

At December 31, 1997,  the Company had  outstanding  $850,000 under a $3,000,000
unsecured line of credit agreement with a bank. Such borrowings are repayable on
demand with interest at the prime rate.  The weighted  average  interest rate on
outstanding short-term borrowings amounted to 8.5%, 8.3%, and 8.8% in 1997, 1996
and 1995, respectively.


4. OPERATING LEASES

The Company leases several operating facilities and vehicles under noncancelable
operating  leases.  Future  minimum lease  payments  consist of the following at
December 31, 1996:

                            1998              $   262,652
                            1999                  184,398
                            2000                  187,621
                            2001                  188,935
                                                  -------
                                        
                                              $   823,606
                                              ===========
                                       

Rent expense  amounted to  $360,352,  $351,222,  and $410,763 in 1997,  1996 and
1995, respectively.



                                       23
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

Differences  between accounting rules and tax laws cause differences between the
bases of certain assets and liabilities for financial reporting purposes and tax
purposes.  The  tax  effects  of  these  differences,  to the  extent  they  are
temporary,  are  recorded as deferred  tax assets and  liabilities.  Significant
components of the Company's  deferred tax assets and  liabilities at December 31
are as follows:
<TABLE>
<CAPTION>

                                                          1997        1996
                                                       ------------------------
<S>                                                   <C>         <C> 
Deferred tax liabilities:
  Property, plant and equipment                       $  161,203  $  178,461
  Prepaid expenses                                        28,899      17,209
                                                          ------      ------
Total deferred tax liabilities                           190,102     195,670

Deferred tax assets:
  Postretirement benefits                                 62,336      60,252
  Pension costs                                          129,009     108,676
  Allowance for doubtful accounts                        173,278     152,190
  Accrued expenses                                        71,094      52,658
  Other employee benefits                                 47,205      39,951
  Inventory costs                                        274,303     341,599
  Other                                                   14,860      14,860
                                                          ------      ------
 Total deferred tax assets                               772,085     770,186
                                                         -------     -------                                                      
Net deferred tax assets                               $  581,983  $  574,516
                                                      ==========  ==========
                                                    
Current deferred tax asset                            $  576,861  $  619,096
Long-term deferred tax asset (liability)                   5,122     (44,580)
                                                           -----     ------- 
                                                      $  581,983  $  574,516
                                                      ==========  ==========
</TABLE>
                                                     
For  financial  reporting  purposes,  income  before  income taxes  includes the
following components:

<TABLE>
<CAPTION>
                                         1997           1996          1995
                                     -------------------------------------------
<S>                                   <C>          <C>            <C>         
United States                         $ 3,475,062  $  1,802,858   $  2,714,028
Foreign (loss) income                     (20,554)      16,326          33,450
                                          -------       ------          ------
                                      $ 3,454,508  $  1,819,184   $  2,747,478
                                      ===========  ============   ============
                                  

</TABLE>



                                       24
<PAGE>


             AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)

Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>

                                         1997         1996             1995
                                ------------------------------------------------
<S>                                  <C>            <C>            <C>  
Current:
  Federal                       $ 1,162,327       $   670,960       $   834,400
  State                             199,227           118,437           117,900
  Foreign                           (12,054)            9,200            33,700
  Prior year taxes                     --                --             (75,091) 
                                  ---------           -------           -------  
Total current                     1,349,500           798,597           910,909

Deferred:
  Federal                            (6,347)         (105,608)           55,900
  State                              (1,120)          (18,637)           (9,900)
                                     ------           -------            ------                                 
                                     (7,467)         (124,245)           46,000
                                     ------          --------            ------
                                $ 1,342,033       $   674,352       $   956,909
                                ===========       ===========       ===========
</TABLE>

                                                                    

The differences between the federal statutory rate and the effective tax rate as
a percentage of income before taxes are as follows:

<TABLE>
<CAPTION>

                                              1997        1996        1995
                                           ------------------------------------
                                           
<S>                                             <C>         <C>         <C>
Statutory income tax rate                       34%         34%         34%
State and foreign income taxes                   3           4           1
Other permanent differences                      2          (1)          -                                        
                                                --          --          --                                         
                                                39%         37%         35%
                                                --          --          -- 
                                          
</TABLE>


6. PENSION PLAN

The Company and its  subsidiaries  have a defined  benefit pension plan covering
substantially  all employees.  Benefits for the salaried  employees are based on
specified  percentages of the employees  annual  compensation.  The benefits for
hourly  employees  are based on stated  amounts  for each year of  service.  The
plan's assets are invested in fixed  interest rate group annuity  contracts with
an insurance  company.  Due to the funding status of the plans,  the Company has
not had to fund the plan since 1981.




                                       25
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. PENSION PLAN (CONTINUED)

The summary of the components of net periodic pension expense follows:

<TABLE>
<CAPTION>
                                              1997        1996        1995
                                           ------------------------------------
<S>                                        <C>         <C>         <C>       
Service cost-benefits earned during the   
 period                                   $  155,750  $  161,276  $  193,514
Interest cost on projected benefit         
 obligation                                  129,881     120,169     113,188
Return on plan assets                       (131,333)   (127,945)   (155,711)
Net amortization and deferral               (103,467)   (114,394)    (92,949)
                                            --------    --------     -------                                            
Net pension expense                       $   50,831    $ 39,106    $ 58,042
                                          ==========    ========    ========
                                          
                                          
</TABLE>

The following  table sets forth the funded status and amounts  recognized in the
statements of consolidated financial position at December 1997 and 1996.

<TABLE>
<CAPTION>

                                                          1997        1996
                                                       ------------------------
<S>                                                    <C>          <C>  
Actuarial present value of benefit
 obligations:
  Vested benefit obligation                          $ 1,840,739    $ 1,544,146
  Non-vested benefit obligation                           31,139         28,541
                                                     -----------    -----------
Accumulated benefit obligation                       $ 1,871,878    $ 1,572,687
                                                     ===========    ===========


Projected benefit obligation for service
  rendered to date                                   $ 2,089,481    $ 1,764,414
Plan assets at fair value                              1,911,849      1,876,393
                                                     -----------    -----------

Excess of projected benefit obligations over plan       (177,632)       111,979
  assets
Unrecognized net loss                                    381,049        250,095
Unrecognized prior service cost                            3,118          1,330
Unrecognized net transition asset                       (529,056)      (635,094)
                                                     -----------    -----------

Net liability recognized in the statement of
  consolidated financial position                    $  (322,521)   $  (271,690)
                                                     ===========    =========== 

</TABLE>

The  average  discount  rate  used in  determining  the  actuarial  value of the
projected  benefit  obligations  was 7% in 1997 and 7.25% in 1996.  The rates of
future years' compensation levels was 5% in 1997 and 5.25% in 1996. The expected
long-term rate of return on plan assets was 7.25% in 1997 and 1996.

Effective  January 1, 1998,  the Company  implemented a  Supplemental  Executive
Retirement  Plan  Based  upon  actuarial  calculations,  the  projected  benefit
obligation of the plan is approximately  $200,000 and the annual expense will be
approximately $64,000.


                                       26
<PAGE>


             AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

In addition to the Company's  defined benefit plan, the Company  provides a life
insurance  benefit to  substantially  all employees  upon  retirement.  Retirees
eligible to participate in this plan have their life insurance  premiums paid on
their behalf by the Company.  The  insurance  premiums  related to this plan are
paid annually.  The following  table presents the plan's status  reconciled with
amounts recognized in the Company's statement of financial position:



<TABLE>
<CAPTION>



                                                             DECEMBER 31
                                                          1997        1996
                                                       ------------------------
<S>                                                    <C>         <C>    

Accumulated postretirement benefit obligation:
  Retirees                                             $ (63,199)  $ (59,941)
  Fully eligible active plan participants                (52,059)    (49,375)
  Other active plan participants                         (18,044)    (17,114) 
                                                         -------     ------- 
Accumulated postretirement benefit obligation           (133,302)   (126,430)
Unrecognized net gain                                     (6,537)     (6,200)
                                                          ------      ------ 
Accrued postretirement benefit cost                    $ (139,839) $ (132,630)
                                                       ==========  ========== 
                                                      

</TABLE>

Net periodic postretirement benefit cost includes the following components:

<TABLE>
<CAPTION>

                                                          DECEMBER 31
                                                 1997        1996        1995
                                            ------------------------------------
<S>                                              <C>         <C>         <C>    
Service cost                                     $ 1,517     $ 1,474     $ 1,882
Interest cost                                      7,180       6,971       8,238
Net gain                                          (1,488)     (1,445)       --
                                                  ======      ======     =======
Net periodic postretirement benefit cost         $ 7,209     $ 7,000     $10,120
                                                 =======     =======     =======
                                                                         
</TABLE>

The  weighted   average  discount  rate  used  in  determining  the  accumulated
postretirement benefit obligations was 7.25% at December 31, 1997 and 1996.

8. CAPITAL STOCK AND STOCK OPTIONS

The Certificate of Incorporation authorizes 4,000,000 shares of common stock and
1,000,000 shares of convertible preferred stock.

In 1988, the Company adopted the American Locker Group  Incorporated  1988 Stock
Incentive Plan, permitting the Company to provide incentive  compensation of the
types  commonly  known as  incentive  stock  options,  stock  options  and stock
appreciation  rights. The price of option shares or appreciation  rights granted
under the plan shall be not less than the fair market  value of common  stock on
the date of grant, and the term of the stock option or appreciation right shall


                                       27
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)

not exceed ten years from date of grant.  Upon exercise of a stock  option,  the
option price shall be payable to the Company in cash,  or at the  discretion  of
the committee,  in shares of common stock valued at the fair market value on the
date of payment, or a combination thereof. Upon exercise of a stock appreciation
right granted in connection  with a stock option,  the optionee shall  surrender
the option  and  receive  payment  from the  Company  of an amount  equal to the
difference  between  the option  price and the fair  market  value of the shares
applicable to the options surrendered on the date of surrender. Such payment may
be  in  shares,   cash  or  both  at  the  discretion  of  the  Company's  Stock
Option-Executive  Compensation  Committee.  At December 31, 1997, 1996 and 1995,
there were no stock appreciation rights outstanding under this plan. The Company
has elected to follow  Accounting  Principles Board Opinion No. 25,  "Accounting
for  Stock  Issued  to  Employees"  (APB  25)  and  related  Interpretations  in
accounting for its employee  stock  options.  Under APB 25, because the exercise
price of the Company's  employee  stock  options  equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"  ("SFAS  123")  and has  been  determined  as if the  Company  had
accounted  for its employee  stock  options  under the fair value method of SFAS
123. The fair value for these options was estimated at the date of grant using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions:   risk-free  interest  rates  of  6.0%;  dividend  yields  of  0.0;
volatility factors of the expected market price of the Company's common stock of
 .37; and a weighted-average  expected life of the option of 5 years. If the fair
value based  method  accounting  provisions  of SFAS 123 had been  adopted,  net
income for 1997 would have been  $2,069,635  and basic and diluted  earnings per
share would have been $2.85 and $2.76, respectively. The per share fair value of
the options granted in 1997 using these assumptions was $4.76. The 1996 and 1995
net income and earnings per share would not have been impacted.

A summary of the  activity  in the  Company's  Employee  Option Plan and related
information for the years ended December 31 follows:

                                       28
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)

<TABLE>
<CAPTION>

                            1997               1996               1995
                            ----               ----               ----

                              Weighted           Weighted           Weighted
                               Average            Average           Average
                              Exercise           Exercise          Exercise
                      Options   Price   Options    Price   Options   Price
                      --------------------------------------------------------
<S>                    <C>      <C>      <C>       <C>      <C>       <C>    
Outstanding -
  beginning of year    25,500   $  3.23  25,500    $  3.23  25,500    $  3.23
Granted                15,000    $11.25     --         --      --         --
                       ------    ------  ------    ------   ------    -------                                    
                    
Outstanding -
  end of year          40,500   $  6.20  25,500    $  3.23  25,500    $  3.23
                       ------   -------  ------    -------  ------    -------

</TABLE>

The  exercise  prices for options  outstanding  as of December  31, 1997 were as
follows:  $2.875 - 19,000  shares,  $4.25 - 6,500  shares,  and  $11.25 - 15,000
shares. The weighted-average remaining contractual life of those options is 4.53
years.

9.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share for the years ended December 31:

<TABLE>
<CAPTION>
                                             1997          1996          1995
                                          --------------------------------------
<S>                                        <C>           <C>           <C>         
Numerator:
  Net income                                $2,112,475   $1,144,832   $1,790,569

Denominator:
  Denominator for basic earnings per
   share - weighted average shares             727,447      808,102      845,350
   outstanding

  Effect of dilutive securities:
   Employee stock options                       22,585       18,867       15,232
                                            ----------   ----------   ----------


  Denominator for diluted earnings
   per share - weighted average
   shares out- standing and assumed            750,032      826,969      860,582
                                            ==========   ==========   ==========
   conversions

Basic earnings per share                    $     2.90   $     1.41   $     2.12
                                            ==========   ==========   ==========

Diluted earnings per share                  $     2.82   $     1.39   $     2.08
                                            ==========   ==========   ==========

</TABLE>


                                       29
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT DATA

The Company has  operations  in the United  States and  Canada.  The  geographic
distribution of sales,  operating income and identifiable  assets for 1997, 1996
and 1995 are as follows:

<TABLE>
<CAPTION>
                            UNITED STATES   CANADA   ELIMINATIONS    TOTAL
                         ----------------------------------------------------
1997
-------
<S>                          <C>           <C>           <C>          <C>    
Revenues from
  unaffiliated
  customers                  $27,995,453   $ 1,300,080   $      --     $29,295,533

Transfers between 
 geographic areas                397,052          --         397,052          --
                             -----------   -----------   -----------   -----------
Total revenues               $28,392,505   $ 1,300,080   $   397,052   $29,295,533
                             ===========   ===========   ===========   ===========
Operating income                3,635,05   $     6,626   $      --     $ 3,641,678
                             ===========   ===========   ===========   ===========
Identifiable assets          $11,209,415   $   944,075   $   889,765   $11,263,725
                             ===========   ===========   ===========   ===========

1996
-----------
Revenues from unaffiliated
  customers                  $20,830,473   $ 1,687,116   $      --     $22,517,589
Transfers between
  geographic areas               665,165          --         665,165          --
                             -----------   -----------   -----------   -----------
Total revenues               $21,495,638   $ 1,687,116   $   665,165   $22,517,589
                             ===========   ===========   ===========   ===========

Operating income             $ 1,698,760   $    37,376   $      --     $ 1,736,136
                             ===========   ===========   ===========   ===========

Identifiable assets          $ 9,978,585   $   931,258   $   889,765   $10,020,078
                             ===========   ===========   ===========   ===========


1995
-----------

Revenues from unaffiliated
  customers                  $22,112,011   $ 1,565,929   $      --     $23,677,940
Transfers between
  geographic areas               485,377          --         485,377          --   
                             -----------   -----------   -----------   -----------

Total revenues               $22,597,388   $ 1,565,929   $   485,377   $23,677,940
                             ===========   ===========   ===========   ===========

Operating  income            $ 2,579,420   $    29,862   $      --     $ 2,609,282
                             ===========   ===========   ===========   ===========

Identifiable assets          $10,060,749   $   934,201   $   888,765   $10,106,185
                             ===========   ===========   ===========   ===========
</TABLE>

In 1997, 1996 and 1995, the Company had export sales of $1,824,837,  $1,123,434,
and

                                       30
<PAGE>



              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. BUSINESS SEGMENT DATA (CONTINUED)

$1,730,087,  respectively.  In 1997,  1996 and 1995,  export  sales  represented
approximately  6.2%, 5.0% and 7.3%,  respectively of the Company's  consolidated
net sales.

Sales to the U.S. Postal Service represented 69.2%, 61.8% and 61.2% of net sales
in 1997, 1996 and 1995, respectively.

At  December  31,  1997 and 1996,  the  Company  had  secured  receivables  from
customers  under time  payment  arrangements  totaling  $181,445  and  $306,532,
respectively.  At December 31, 1997, the Company had unsecured trade receivables
from customers  considered to be  distributors  of $310,758  (including a United
Kingdom  distributor of $188,424) and from governmental  agencies of $2,381,643.
At December 31, 1996, the Company had unsecured trade receivables from customers
considered  to  be  distributors   of  $312,709   (including  a  United  Kingdom
distributor of $129,932) and from governmental agencies of $1,610,504.

Other  concentrations  of credit risk with respect to trade accounts  receivable
are  limited  due to the  large  number of  entities  comprising  the  Company's
customer base and their dispersion across many different industries.




                                       31
<PAGE>

<TABLE>
<CAPTION>

              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a tabulation of the unaudited  quarterly  results of operations
for the years ended December 31, 1997 and 1996:

                                                         1997
                                ---------------------------------------------------------
                                                    THREE MONTHS ENDED
                                 MARCH 31     JUNE 30        SEPTEMBER 30    DECEMBER 31
                                ---------------------------------------------------------
<S>                             <C>           <C>              <C>           <C>        
Net sales                      $  5,283,597   $   7,722,976   $   6,906,402   $9,382,558
                               ============   =============   =============   ==========
Gross profit                   $  1,617,925   $   2,333,741   $   2,044,312   $2,765,545
                               ============   =============   =============   ==========

Net income                     $    223,806   $     553,973   $     423,887   $  910,809
                               ============   =============   =============   ==========


Earnings per share - Basic     $        .28   $         .70   $         .59   $     1.33
                               ============   =============   =============   ==========

Earnings per share - Diluted   $        .27   $         .68   $         .57   $     1.30
                               ============   =============   =============   ==========


                                                           1996
                               ----------------------------------------------------------
                                                    THREE MONTHS ENDED
                                 MARCH 31     JUNE 30        SEPTEMBER 30    DECEMBER 31
                               ----------------------------------------------------------

<S>                            <C>            <C>            <C>            <C>
Net sales                      $  4,946,120   $  5,961,890   $  5,955,670   $   5,653,909
                               ============   ============   ============   =============

Gross profit                   $  1,447,412   $  1,922,588   $  1,781,680   $   1,573,953
                               ============   ============   ============   =============
Net income
                               $    192,612   $    335,955   $    364,735   $     251,530
                               ============   ============   ============   =============

Earnings per share - Basic     $        .24   $        .41   $        .45   $         .31
                               ============   ============   ============   =============

Earnings per share - Diluted   $        .23   $        .41   $        .44   $         .31
                               ============   ============   ============   =============

</TABLE>




                                       32
<PAGE>


              AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - (CONTINUED)

The  Company's  accounting  practice for interim  periods  provides for possible
inventory,  insurance,  pension  and income tax  adjustments.  Such  adjustments
resulted  in  increasing  1997 fourth  quarter  pretax  income by  $177,356  for
inventory  costs and increasing net income by $57,586 for income tax expense.  A
decrease in fourth quarter  pretax income of $58,040 was due to adjustments  for
pension costs. In 1996 such  adjustments  resulted in increasing  fourth quarter
pretax  income by $103,791  for  inventory  costs and  increasing  net income by
$158,682 for income tax expense.  A decrease in fourth  quarter pretax income in
the amount of $48,141 was due to  adjustments  for pension costs and  receivable
reserves.  In 1995,  adjustments  resulted in increasing  fourth  quarter pretax
income by $51,000 for insurance and pension costs and  increasing  net income by
$178,000 for income tax expense. A decrease in 1995 fourth quarter pretax income
of $209,000 was due to adjustments for inventory costs.


12. RELATED PARTIES

One of the Company's  subsidiaries  has entered into a  manufacturing  agreement
with Signore, Inc. a former wholly-owned  subsidiary of the Company, under which
Signore will furnish fabricating, assembly and shipping services. The Agreement,
which expires on April 30, 2000, provides that the cost to the Company for these
services will be equal to Signore's standard cost divided BY 80%. Purchases from
Signore under the Agreement  amounted to  $3,632,254,  $3,489,499 and $3,470,582
for the years ended December 31, 1997, 1996 and 1995, respectively.

Two  Directors  of the Company are  Stockholders  and  Directors  of Rollform of
Jamestown  Inc.,  a  rollforming  company.  One  of the  Company's  subsidiaries
purchased  $114,004,  $90,084 and $98,571 of  fabricated  parts from Rollform of
Jamestown, Inc. in 1997, 1996 and 1995, respectively, at prices that the Company
believes are at arms length.


13. CONTINGENCIES

The  Company has been named as a defendant  by four  former  employees  alleging
discrimination  and  seeking  unspecified  damages.  The  Company has denied all
charges and it intends to  vigorously  defend this  matter.  It is  management's
opinion that the ultimate outcome of this matter will not have a material impact
on the Company's financial position or operating results.

Although no formal legal proceedings have been directed towards the Company,  it
has  been  alleged  that  the  Company  and/or  one  of  its  previously   owned
subsidiaries is a potentially responsible party at a site suspected to have some
form of  environmental  contamination.  The  Company  believes  that it bears no
liability for this site.



                                       33
<PAGE>



ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no changes in or  disagreements  with  accountants on accounting
and financial disclosures during 1997 or 1996.


                                   PART III

Item 9, 10, 11, and 12 will be contained in American Locker Group Incorporated's
Annual Proxy Statement,  incorporated  herein by reference,  which will be filed
within 120 days after year-end.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-KSB

            (a)   Exhibits - Exhibits required by Item 601 of Regulation S-B are
                  submitted as a separate section herein  immediately  following
                  the "Exhibit Index".

            (b)   Reports on Form 8-KSB filed in the fourth quarter of 1997 -
                  None.






                                       34
<PAGE>




In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                      AMERICAN LOCKER GROUP INCORPORATED

                           /S/ HAROLD J. RUTTENBERG
                           ------------------------
                             Harold J. Ruttenberg
                          Chairman, Chief Executive
                            Officer, Treasurer and
                         Principal Accounting Officer

                                March 17, 1998

In  accordance  with the Exchange  Act, 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                                       TITLE             DATE
---------                                       -----             ----

/S/ HAROLD J. RUTTENBERG                  Chairman, Chief      March 17, 1998
------------------------
Harold J. Ruttenberg                      Executive Officer,
                                          Treasurer, Principal
                                          Accounting Officer
                                          and Director

/S/ ROY J. GLOSSER                        President, Chief     March 17, 1998
------------------------
Roy J. Glosser                            Operating Officer
                                          and Director

                                          Director            March __, 1998
------------------------
Thomas Phillips Johnson

/S/ ALAN H. FINEGOLD                      Director             March 17, 1998
------------------------
Alan H. Finegold

/S/ THOMAS LYNCH, IV                      Director             March 17, 1998
------------------------
Thomas Lynch, IV

/S/ JAMES E. RUTTENBERG                   Director             March 17, 1998
------------------------
James E. Ruttenberg


/S/ EDWARD F. RUTTENBERG                  Director             March 17, 1998
------------------------
Edward F. Ruttenberg


                                       35
<PAGE>



                            EXHIBIT INDEX
                                                     PRIOR FILING OR
                                                     SEQUENTIAL PAGE
EXHIBIT NO.                                          NO. HEREIN
-----------                                          ----------

  3.1             Certificate of Incorporation of    Exhibits to Form 10-K
                  American Locker Group Incorporated for Year ended
                                                     December 31, 1980

  3.2             Amendment to Certificate of        Form 10-C filed May 6,
                  Incorporation changing name of     1985
                  company

  3.3             Amendment to Certificate of        Exhibit to Form 10-K for
                  Incorporation limiting liability   year ended December 31,
                  of Directors and Officers          1987

  3.4             By-laws of American Locker Group   Exhibit to Form 10-K for
                  Incorporated as amended and        year ended December 31,
                  restated                           1985

  3.5             Amendment to By-laws of American   Exhibit to Form 10-K for
                  Locker Group Incorporated dated    year ended December 31,
                  January 15, 1992                   1991

10.1              American Locker Group              Exhibit to Form 10-K for
                  Incorporated 1988 Stock Incentive  year ended December 31,
                  Plan                               1988

10.2              First Amendment dated March 28,    Exhibit to Form 10-K for
                  1990 to American Locker Group      year ended December 31,
                  Incorporated  1988 Stock           1989
                  Incentive Plan

10.3              Form of Indemnification Agreement  Exhibit to Form 10-K for
                  between American Locker Group      year ended December 31,
                  Incorporated  and its directors    1987
                  and officers

10.4              Corporate Term Loan Agreement      Exhibit to Form 10-K for
                  between American Locker Group      year ended December 31,
                  Incorporated and Manufacturers     1991
                  and Traders Trust Company
                  covering $2,400,000 loan

10.5              Approved Line of Credit from       Exhibit to Form 10-K for
                  Manufacturers and Traders Trust    year ended December 31,
                  Company to American Locker Group   1990
                  Incorporated in the amount of
                  $1,000,000

10.6              Amendment Agreement dated May 1,   Exhibit to Form 10-KSB
                  1994 between Manufacturing and     for year ended
                  Traders Trust Company and          December 31, 1994
                  American Locker Group
                  Incorporated [Increase in Term
                  Loan to $1,850,000]

<PAGE>

10.7              Amendment Agreement dated          Exhibit to Form 10-KSB
                  March 12, 1996 between             for year ended
                  Manufacturing and Traders Trust    December 31, 1995
                  Company and American Locker Group
                  Incorporated [Increase in Term
                  Loan to $1,800,000]

10.8              Employment Agreement between       Exhibit to Form 10-GSB
                  American Locker Group              for quarter ended June
                  Incorporated and  Roy J. Glosser   30, 1996

10.9              Manufacturing Agreement dated as   Exhibit to Form 8-K
                  of December 29, 1989 between       dated January 11, 1990
                  American Locker Security Systems
                  Inc. and Signore, Inc.

 10.10            First Amendment dated May 3, 1995  Exhibit to Form 10-KSB
                  to Manufacturing Agreement dated   for year ended December
                  as of December 29, 1989 between    31, 1995
                  American Locker Security Systems
                  Inc. and Signore Inc.

 10.11            Second Amendment dated March 15,   Exhibit to Form 10-KSB
                  1996 to Manufacturing Agreement    for the year ended
                  dated as of December 29, 1989      December 31, 1995
                  between American Locker Security
                  Systems Inc. and Signore Inc.

10.12             Third Amendment dated May 21,      Exhibit to Form 10-QSB
                  1996 to Manufacturing Agreement    for the quarter ended
                  dated as of December 29, 1989      June 30, 1996
                  between American Locker Security
                  Systems Inc. and Signore Inc.

10.13             Agreement dated as of May 21,      Exhibit to Form 10-QSB
                  1996 between American Locker       for the quarter ended
                  Group Incorporated and Edward F.   June 30, 1996
                  Ruttenberg

10.14             Contract dated March 27, 1996      Exhibit to Form 10-QSB
                  between the U.S. Postal Service    for the quarter ended
                  and American Locker Security       March 31, 1996
                  Systems, Inc.

10.15             Modification #MO3 to USPS          Exhibits to Form 10QSB
                  Contract #072368-96-B-0741 dated   for the quarter ended
                  April 16, 1997                     March 31, 1997

10.16             First Amendment dated May 20,      Exhibits to Form 10QSB
                  1997 to Agreement dated as of      for the quarter ended
                  May 21, 1996 between American      June 30, 1997
                  Locker Group Incorporated and
                  Edward F. Ruttenberg

10.17             Fourth Amendment to Manufacturing  Exhibits to Form 10QSB
                  Agreement dated as of May 20,      for the quarter ended
                  1997 between American Locker       June 30, 1997
                  Security Systems, Inc. and
                  Signore, Inc.

<PAGE>


10.18             Amendment dated August 22, 1997    Exhibit to Form 10QSB
                  to Corporate Term Loan Agreement   for the quarter ended
                  dated August 30, 1991 between      September 30, 1997
                  American Locker Group
                  Incorporated and Manufacturers
                  and Traders Trust Company

10.19             Modification M05 to USPS Contract  Exhibit to Form 10QSB
                  #072368-96-B-0741, dated           for the quarter ended
                  October 9, 1997, which replaces    September 30, 1997
                  steel pedestals with aluminum
                  pedestals for American Locker
                  Outdoor Parcel Lockers

10.20             Modification M06 to USPS Contract  Exhibit to Form 10QSB
                  #072368-96-B-0741, dated           for the quarter ended
                  October 23, 1997 regarding prices  September 30, 1997
                  and minimum quantities through
                  April 14, 1998

10.21             Form of American Locker Group      Page ________
                  Incorporated Supplemental
                  Executive Retirement Benefit
                  Plan
22.1              List of Subsidiaries               Page ________

27.1              Financial Data Schedule            Page ________

<PAGE>
                                       38


                      Exhibit 22.1 List of Subsidiaries

The following  companies are subsidiaries of the Company and are included in the
consolidated financial statements of the Company:

                                                             PERCENTAGE OF
                                    JURISDICTION OF          VOTING SECURITIES
 NAME                               ORGANIZATION             OWNED
 ----                               ------------             -----

American Locker Security Systems,   Delaware                 100%
Inc.
American Locker Company, Inc.       Delaware                 100%
American Locker Company of Canada,  Dominion of Canada       100% (1)
Ltd.
Canadian Locker Company, Ltd.       Dominion of Canada       100% (2)
American Locker Security Systems    Virgin Islands           100% (1)
International


(1)   Owned by American Locker Security Systems, Inc.
(2)   Owned by American Locker Company of Canada, Ltd.


                                       39