PAGE
<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

(Mark One)

  (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    
      AND EXCHANGE OF 1934

      For the quarterly period ended     March 31, 1997

                                       OR

  ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
      EXCHANGE ACT OF 1934        


  For the transition period from                to                 


                      Commission File Number     0-12595  

                               MicroENERGY, Inc.                             
           (Exact Name of Registrant as specified in its Charter)

       Delaware                                             36-3262274     
(State or other Jurisdiction of                           (I.R.S. Employer   
Incorporation or Organization                            Identification No.)

350 Randy Road, Carol Stream, IL                               60188       
 (Address of Executive Offices)                                   (Zip Code)    

   Registrant's Telephone Number, including Area Code: (630) 653-5900

Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.

                       Yes   X                  No       

Indicate the  number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.

As of March 31, 1997 there were outstanding 525,707 shares of Common Stock,
$.01 par value.
                                                                                



                                        




                               MICROENERGY, INC.
                                     INDEX


Part 1 - Financial Information

     Item 1 - Financial Statements

              Condensed Balance Sheet
              March 31, 1997 (unaudited) and June 30, 1996

              Condensed Statements of Operations (unaudited) for the
              quarter and nine months ended March 31, 1997 and              
              March 31, 1996.
  
              Condensed Statements of Cash Flows (unaudited) nine months    
              ended March 31, 1997 and March 31, 1996.

              Notes to condensed Financial Statements (unaudited)

     Item 2 - Management Discussion and Analysis of Financial Condition
              and Results of Operations.

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk 


<PAGE>
                               MICROENERGY, INC.
                            CONDENSED BALANCE SHEETS

                                                    3rd Quarter
                                                Ended       Year Ended
                                                3/31/97      6/30/96  
                                              (unaudited)    (audited)
<TABLE>
<S>                                              <C>           <C>
ASSETS
Current assets:
  Cash                                       $    9,700    $   19,615     
  Accounts receivable                         2,390,354     1,601,989  
  Inventories                                 3,509,580     3,364,846          
  Other current assets                          224,744        51,543
    Total current assets                      6,134,378     5,037,993
Machinery and equipment                       6,082,824     5,113,120          
Accumulated depreciation                     (3,678,655)   (3,201,432)
                                              2,404,169     1,911,688          
Other assets, net                               155,047       329,674
                                            $ 8,693,594    $7,279,355
</TABLE>

LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S>                                                                                                 <C>            <C>
Current liabilities:
  Notes payable                             $              $1,875,373
  Current portion of long-term obligations      902,770     2,341,020
  Accounts payable                            1,330,502     1,918,524
  Accrued expenses                              336,044       507,201
     Total current liabilities                2,569,316     6,642,118
Long-term obligations                         3,727,550       874,475
    Total liabilities  6,296,866 7,516,593
Stockholders' equity:                
 8% Cumulative Series A Preferred Stock,    
   $7.00 liquidation preference, 844,500                                                        
   shares authorized and outstanding          2,838,896         --
  Common Stock, $.01 par value - 4,000,000
   shares authorized; 525,707 shares
   issued in 1996 and 316,560 in 1995             5,257         4,215
  Additional paid-in capital                  6,050,034     5,842,616
  Accumulated deficit                        (5,212,668)   (5,004,208)
  Unearned restricted stock compensation     (1,361,050)   (1,401,550)
  Common Stock Purchase Warrants,                    75            75
  Preferred Stock Purchase Warrants,            112,725        88,000
  Preferred Stock subscription                     --         250,000 
  Treasury Stock, at cost, 1,898 shares         (16,386)      (16,386)
  Current Year Earnings/(Loss)                  (20,155)       --        
Total Stockholders' Equity (note 2)           2,396,728      (237,238)
                                            $ 8,693,594    $7,279,355

/TABLE
<PAGE>
                        MICROENERGY, INC.
                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

                          3 Months     3 Months     9 Months     9 Months
                            Ended        Ended        Ended        Ended
                          03/31/97     03/31/96     03/31/97     03/31/96
<TABLE>
<S>                     <C>         <C>          <C>          <C>

Sales                   $ 4,135,276  $ 3,997,190  $11,840,667   $10,718,611

Expenses:
  Facility, pre-
   production and
   production             3,293,167    3,216,572     9,469,109    8,512,503

  Research and
    Development             316,815      296,613       959,720      813,290

  Selling, Gen and
   Administrative           424,575      353,900     1,209,180    1,000,188 

  Operating Income\(Loss)   100,719      130,105       202,658      392,630
   
  Interest Expense           81,594       81,067       222,813      241,322 
   

 Net Profit\(Loss)
   Before extraordinary      19,125       49,038       (20,155)     151,308 
    item

  Extraordinary item-gain 
   on debt restructuring          0    1,000,561             0    1,000,561

  Net Profit\(Loss)          19,125    1,049,599       (20,155)   1,151,869
                          
  Preferred Dividends       104,230            0       312,690            0

 Net Profit\(Loss)
   Available to    
   Common Shareholders      (85,105)   1,049,599      (332,845)   1,151,869 

                           
  Net Profit\(Loss)
   per share:
   Before Extraordinary  $   (0.162)  $    0.140   $   (0.633)   $   0.432 
   Extraordinary item    $        0   $    2.858   $        0    $   2.858 


         Total           $   (0.162)  $    2.998   $   (0.633)   $   3.290  


  Weighted avg number
   of shares of 
   common stock             525,707       350,141      525,707      350,141
</TABLE>

                                     
                               MICROENERGY, INC.
                            STATEMENTS OF CASH FLOWS

                               Nine Months    Nine Months 
                                  Ended         Ended  
                                 03/31/97     03/31/96  
<TABLE>
<S>                                 <C>          <C>
Cash flows from operating
 activities:
 Net (losses) earnings        $    (20,155)  $1,151,869              
 Adjustments to reconcile net
  (losses) earnings to net cash
   provided by operations:
   Depreciation                    477,223      430,882

   Changes in assets and 
     liabilities:
     Accounts receivable          (788,365)    (381,390)
     Inventories                  (144,734)    (736,242)
     Other current assets            1,426      (59,439)
      Accounts payable            (588,022)     389,423                                       
     Accrued expenses             (171,157)    (199,094)             
                                                                     
  Net cash provided (used) by
  operating activities          (1,233,784)     596,009       
Cash flows (used in) provided by 
 investing activities:
 Additions to equipment           (969,704)    (452,221)             
Cash flows provided by (used in)
 financing activities:
 Notes Payable                  (1,875,373)     486,554              
 Long-term debt, net of payments 1,414,825   (1,120,379)
 Equity Transactions             2,654,121      386,810              
Net cash provided by (used in)
 financing activities            2,193,573     (247,015)             
Net increase (decrease) in cash   (  9,915)    (103,227)            
Cash at beginning of period         19,615      113,227              
Cash at end of period          $     9,700   $   10,000              
/TABLE
<PAGE>
                               MICROENERGY, INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)
1. CONDENSED FINANCIAL STATEMENTS

The condensed Balance Sheet as of March 31, 1997, the Consolidated
Statements of Income for the three and nine month periods ended March 31,
1997 and March 31, 1996 and the Condensed Statements of Cash Flows for the
nine month period ended March 31, 1997 and March 31, 1996 have been
prepared by the Company, without audit.  In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and changes in
financial position at March 31, 1997 and for all periods presented have
been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  It is suggested that these
condensed statements be read in conjunction with the financial statements
and notes thereto included in the Company's June 30, 1996 Form 10K report. 
The results of operations for the period ended March 31, 1997 is not
necessarily indicative of the operating results for the full year.

2. SECURITIES OFFERING

On July 16, 1996, the Company sold 494,500 shares of Series A Cumulative
preferred Stock, $.01 par value, at $7.00 per share, and 247,250 Redeemable
Class A Warrants for Series A Preferred Stock, at $.10 per warrant. 
Dividends on the Preferred Stock are cumulative from the issue date and are
payable semi-annually at the rate of 8% per annum.  At the company's
option, the dividends may be paid in cash  or in shares of the Company's
Common Stock. On January 1, 1997, the Company issued 104,230 shares of
Common Stock as the initial semi-annual dividend on the Preferred Stock.

Each Class A Warrant entitles the holder to purchase one share of the
Company Series A Preferred Stock at an exercise price of $7.00, subject to
adjustment, from July 10, 1997 through July 9, 2000.
<PAGE>
Part 1
Item 2
                               MICROENERGY, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Quarter Ended March 31, 1997 versus March 31, 1996

Revenues for the quarter ended March 31, 1997 increased 3.4% to $4,135,276
compared to $3,997,190 for the comparable quarter in 1996.  Manufacturing
costs increased 2.4% to $3,293,167 from 3,216,572 as a result of the
introduction of new programs and increasing production.  Research &
Development expenses increased to $316,185 from $296,613 in the same
quarter a year earlier.  Selling, General & Administrative expenses
increased to $424,575 from $353,900 in the same quarter a year earlier. The
increases in Research & Development and Selling, General & Administrative
reflect strategic investments made in support of new programs.  Interest
expense remained flat at $81,594 compared to $81,067 for the quarter ended
March 31, 1996.  As a result of the foregoing, net income before
extraordinary gain totaled $19,125 versus the prior year amount of $49,038. 
During the three months ended March 31, 1996, the Company realized an
extraordinary gain of $1,000,561 on debt compromise.

Nine Months Ended March 31, 1997 versus March 31,1996                

Revenues for the nine months totaled $11,840,667 compared to $10,718,611,
representing an increase of 10.4%.  The improved sales were the direct
result of an expansion in business attributable to new programs released
during the fiscal year.  Manufacturing costs rose 11.2% to $9,469,109 from
$8,512,503 for the comparable period last year.  The increase was
attributable to a combination of the start-up phase of new programs and the
increased level of production.  As a percentage of sales, manufacturing
costs remained relatively constant at 80.0% and 79.4% respectively. 
Research & Development expenses rose by 18.0%, or $146,430 reflecting the
increased allocation of financial resources to enhancing existing products
and developing new products. These development initiatives are the driving
component in new business development.  Overall, the Company has five new
programs in various stages of development.  These new programs, if accepted
by our customers and sales prospects, could yield approximately $9 million
in additional sales.  The Company believes that its future competitive
position will depend in large part on its ability to develop new programs
quickly and cost effectively, maintain and enhance its current line and
meet an ever expanding range of customer needs.  In addition to customer
driven research and development, the Company invests limited resources in
advanced research to explore new applications of its core technology. 
Selling, General & Administrative expenses (SG&A) increased $208,992 to
$1,209,180 from $1,000,188 for the comparative nine month period last year.
As a percentage of sales, SG&A increased to 10.2% from 9.3% over the same
period.  The dollar increase results from higher commissions, salaries, and
benefits, and other related expenses incurred to strengthen the Company's 







operating strategies.  As a result of the foregoing, the Company recorded
operating income of $202,658 compared to operating income of $392,630 last
year.  Operating income decreased by $189,972 primarily as a result of
increased activity in the pre-production phase of preparing for production
of new systems.  Net interest expense totaled $222,813 compared to the
prior year amount of $241,322.  The Company realized an extraordinary gain
of $1,000,561 in the period last year from debt compromise on debt
restructuring.  Net loss for the period totaled $20,155 or $0.038 per share
prior to the dividend impact of $312,690 for the Series A Preferred Stock. 
Net Income for the calculation of earnings per share was adjusted downward
to reflect the impact of the dividend, resulting in an earnings per share
loss of $0.63 per share.



 
Liquidity and Capital Resources

At March 31, 1997, the Company had a working capital surplus of $3,565,062
as compared to a working capital deficit of $1,604,125 at June 30, 1996. 
The primary reasons for the improvement have been the completion of a
public offering of securities in July 1996 and the use of long-term debt to
finance a reduction of short-term borrowing and an increase in accounts
receivable.  Accounts Receivable are $788,365 higher than the fiscal year
end balance.  This increase is mainly due to the increased sales. 
Inventories have increased $144,734, or approximately 4% over the nine
month period, reflecting an increase in business volume.

During the first three quarters of fiscal 1997, the Company has invested
approximately $1,000,000 in capital equipment.  To finance the capital
additions, the Company obtained a four year term loan for $750,000 from its
primary lender.

During the quarter the Company satisfied its first semi-annual dividend
payout to its Series A Preferred Stock shareholders, by issuing a stock
dividend in lieu of a cash dividend.  The cash savings helped to improve
the Company's working capital by $208,460.

The Company is current with all of its debt obligations, and has
approximately $.9 million available on its revolving line of credit as of
March 31, 1997  Management expects that its current cash and working
capital position, combined with cash expected to be generated from
operations will be sufficient to service the Company's debt and fund the
Company for the coming fiscal year.


Part 1
Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no market rate sensitive instruments.
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1933, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date May 2, 1997                  By(s)   Robert G. Gatza   
                                         Robert G. Gatza
                                        President and CEO



Date May 2, 1997                  By(s)  Robert J. Fanella                  
                                         Robert J. Fanella
                                        Chief Financial Officer
                                        and Treasurer