The photovoltaic (PV) power conditioning system for small-scale applications has gained significant interest in the past few decades. However, the standalone mode of operation has been rarely approached. This paper presents a two-stage multi-level micro-inverter topology that considers the different operation modes. A multi-output flyback converter provides both the DC-Link voltage balancing for the multi-level inverter side and maximum power point tracking control in grid connection mode in the PV stage. A modified H-bridge multi-level inverter topology is included for the AC output stage. The multi-level inverter lowers the total harmonic distortion and overall ratings of the power semiconductor switches. The proposed micro-inverter topology can help to decrease the size and cost of the PV system. Transient analysis and controller design of this micro-inverter have been proposed for stand-alone and grid-connected modes. Finally, the system performance was verified using a 120 W hardware prototype.