SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                FORM 10-Q/A No. 1


(Mark One)
[X]   Quarterly report pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934,

      For the quarterly period ended May 3, 1998 or

[ ]   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

      Commission file number 0-15995


                                 MICROAGE, INC.
             (Exact name of registrant as specified in its charter)

        Delaware                                                 86-0321346
(State of incorporation)                                     (I. R. S. Employer
                                                             Identification No.)


   2400 South MicroAge Way, Tempe, AZ                              85282
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code: (602) 366-2000

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 and
(2) has been subject to such filing requirements for the past 90 days.

                                Yes [X] No [ ]

The number of shares of the registrant's Common Stock (par value $.01 per share)
outstanding at December 31, 1998 was 20,315,711.
<PAGE>
This Form 10Q/A No. 1 for MicroAge, Inc. (the "Company") is being filed pursuant
to Regulation  S-K Item  601(c)(2)(iii)  to amend the Form 10Q for the quarterly
period  ended  May 3,  1998  due to an  aquisition  in  fiscal  1997  originally
accounted  for as a  pooling  of  interests  that has been  restated  under  the
purchase  method of accounting  (see Note A of Notes to  Consolidated  Financial
Statements (Unaudited) for additional information).

                                      INDEX

                                 MICROAGE, INC.


PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

          Consolidated balance sheets -- May 3, 1998 and
          November 2, 1997.                                           2

          Consolidated statements of operations -- Quarters
          ended May 3, 1998 and May 4, 1997; 26 weeks ended
          May 3, 1998 and May 4, 1997                                 3

          Consolidated statements of cash flows -- 26 weeks
          ended May 3, 1998 and May 4, 1997.                          4

          Notes to consolidated financial statements.                 5

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.                        7

PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                           12

SIGNATURES                                                           13
<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                                 MICROAGE, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                        (in thousands, except share data)

                                     ASSETS
                                                        May 3,       November 2,
                                                         1998           1997
                                                     ------------    -----------
Current assets:
  Cash and cash equivalents                          $   35,454       $ 22,279
  Accounts and notes receivable, net                    269,960        233,942
  Inventory, net                                        518,259        479,332
  Other                                                  15,382         11,356
                                                     ----------       --------
     Total current assets                               839,055        746,909

Property and equipment, net                              92,326         73,975
Intangible assets, net                                  110,032         85,903
Other                                                    13,510         12,609
                                                     ----------       --------
     Total assets                                    $1,054,923       $919,396
                                                     ==========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                   $  729,347       $591,538
  Accrued liabilities                                    24,906         22,527
  Current portion of long-term obligations                3,035          2,744
  Other                                                   5,906          3,836
                                                     ----------       --------
     Total current liabilities                          763,194        620,645

Line of credit                                               --         30,650
Long-term obligations                                     5,474          4,537
Other long-term liabilities                               8,993          1,239

Stockholders' equity:
  Preferred stock, par value $1.00 per share;
    Shares authorized: 5,000,000
    Issued and outstanding: none                             --             --
  Common stock, par value $.01 per share;
    Shares authorized: 40,000,000
    Issued: May 3, 1998      - 19,620,539
            November 2, 1997 - 18,451,653                   196            184
  Additional paid-in capital                            197,305        170,829
  Retained earnings                                      79,927         92,129
  Treasury stock, at cost;
    Shares: May 3, 1998      - 16,378
            November 2, 1997 - 80,378                      (166)          (817)
                                                     ----------       --------
     Total stockholders' equity                         277,262        262,325
                                                     ----------       --------
     Total liabilities and stockholders' equity      $1,054,923       $919,396
                                                     ==========       ========

   The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
                                 MICROAGE, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                          Quarter ended            26 weeks ended
                                    -----------------------   -----------------------
                                      May 3,       May 4,       May 3,       May 4,
                                       1998         1997         1998         1997
                                    ----------   ----------   ----------   ----------
<S>                                 <C>          <C>          <C>          <C>
 Revenue                            $1,326,950   $1,058,304   $2,505,961   $1,943,062

 Cost of sales                       1,242,369      987,353    2,347,555    1,811,571
                                    ----------   ----------   ----------   ----------

 Gross profit                           84,581       70,951      158,406      131,491

 Operating and other expenses
  Operating expenses                    79,652       52,566      152,713       99,436
  Restructuring and other one-time
   charges                               5,600           --        5,600           --
                                    ----------   ----------   ----------   ----------

      Total                             85,252       52,566      158,313       99,436
                                    ----------   ----------   ----------   ----------

 Operating income (loss)                  (671)      18,385           93       32,055

 Other expenses - net                    9,171        7,441       20,112       12,322
                                    ----------   ----------   ----------   ----------

 Income (loss) before income taxes      (9,842)      10,944      (20,019)      19,733

 Income tax provision (benefit)         (3,885)       4,568       (7,946)       8,287
                                    ----------   ----------   ----------   ----------

 Net income (loss)                  $   (5,957)  $    6,376   $  (12,073)  $   11,446
                                    ==========   ==========   ==========   ==========
Net income (loss) per common and
common equivalent share:
  Basic                             $    (0.30)  $     0.39   $    (0.62)  $     0.70
                                    ==========   ==========   ==========   ==========

  Diluted                           $    (0.30)  $     0.38   $    (0.62)  $     0.67
                                    ==========   ==========   ==========   ==========
Weighted average common and common
equivalent shares outstanding:
  Basic                                 19,584       16,404       19,520       16,323
                                    ==========   ==========   ==========   ==========

  Diluted                               19,584       16,944       19,520       17,129
                                    ==========   ==========   ==========   ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
                                 MICROAGE, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                Increase (Decrease) in Cash and Cash Equivalents
                                 (in thousands)

                                                             26 weeks ended
                                                         ----------------------
                                                           May 3,       May 4,
                                                           1998         1997
                                                         ---------    ---------
Cash flows from operating activities:
 Net income (loss)                                       $ (12,073)   $  11,446
 Adjustments to reconcile net income (loss)
  to net cash provided by (used in)
  operating activities:
    Depreciation and amortization                           18,451       11,647
    Provision for losses on accounts and
     notes receivable                                        6,630        3,250
    Changes in assets and liabilities, net
     of business acquisitions:
      Accounts and notes receivable                        (15,466)       6,486
      Inventory                                            (29,338)    (137,601)
      Other current assets                                  (3,844)         209
      Other assets                                          (5,613)      (4,399)
      Accounts payable                                     103,414       76,676
      Accrued liabilities                                      630        1,196
      Other liabilities                                      9,193        8,383
                                                         ---------    ---------
     Net cash provided by (used in) operating activities    71,984      (22,707)

Cash flows from investing activities:
 Purchases of property and equipment                       (28,232)     (18,028)
                                                         ---------    ---------
     Net cash used in investing activities                 (28,232)     (18,028)

Cash flows from financing activities:
 Proceeds from issuance of stock - stock option
  and employee stock purchase plans                          2,139        2,722
 Net borrowings (payments) under line of credit            (30,650)      46,500
 Amounts received from ESOT                                     --          207
 Shareholder distributions - pooled companies                 (129)          --
 Net change in long-term obligations                        (1,937)         230
                                                         ---------    ---------
     Net cash provided by (used in) financing activities   (30,577)      49,659
                                                         ---------    ---------
Net increase in cash and cash equivalents                   13,175        8,924

Cash and cash equivalents at beginning of period            22,279       21,935
                                                         ---------    ---------
Cash and cash equivalents at end of period               $  35,454    $  30,859
                                                         =========    =========

   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>
                                 MICROAGE, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited  consolidated financial statements of MicroAge,  Inc.
(the "Company") do not include all of the information and footnotes  required by
generally accepted accounting principles for complete financial  statements.  In
the opinion of  management,  all  adjustments  (consisting  of normal  recurring
accruals)  considered  necessary for a fair statement of results for the periods
have been included. Certain prior year amounts have been reclassified to conform
with current year financial statement presentation. Operating results for the 26
weeks ended May 3, 1998 are not  necessarily  indicative of the results that may
be expected for the year ending November 1, 1998. For further information, refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended November 2, 1997.

On November 14, 1997,  the Company issued shares of its common stock in exchange
for all of the outstanding  shares of a reseller.  The merger has been accounted
for as a pooling of  interests  and,  accordingly,  the  Company's  consolidated
financial  statements  have been restated to include the accounts and operations
of the acquired company for all periods presented.

In addition,  the Company's consolidated financial statements have been restated
for a fiscal 1997 acquisition.  This acquisition was originally accounted for on
a pooling of interests basis.  Information came to light indicating that actions
taken by the former  owners of the  acquired  business  rendered  the pooling of
interests accounting inappropriate. The Company has restated the fiscal 1997 and
1996 financial  statements to reflect such acquisition using the purchase method
of accounting.  The Company has also restated the previously issued consolidated
results for each of the first  three  fiscal  quarters  of 1998 to reflect  such
acquisition using the purchase method of accounting. The charge was $702,000 per
quarter of additional goodwill amortization shown as other expense in the income
statement.

The results of operations  previously  reported by the separate  enterprises and
the  combined  amounts  presented  in the  accompanying  consolidated  financial
statements are summarized below (in thousands).


 Quarter ended May 4, 1997:                               Pooling
                                                        Converted to
                           MicroAge,Inc.  Acquired Co.    Purchase     Combined
                           -------------  ------------    --------     --------

 Revenue                    $1,086,018      $15,089       $(42,803)   $1,058,304
 Net income                 $    6,244      $   323       $   (191)   $    6,376


 26 weeks ended May 4, 1997:                              Pooling
                                                        Converted to
                           MicroAge,Inc.  Acquired Co.    Purchase     Combined
                           -------------  ------------    --------     --------

 Revenue                    $1,976,766      $21,761       $(55,465)   $1,943,062
 Net income                 $   11,101      $   503       $   (158)   $   11,446

In addition,  certain amounts  receivable from vendors have been reclassified to
accounts payable to conform with industry practice

                                       5
<PAGE>
NOTE B - OTHER EXPENSES - NET

Other expenses - net consists of the following (in thousands):

                                     Quarters ended          26 weeks ended
                                   -----------------      -------------------
                                    May 3,    May 4,       May 3,      May 4,
                                    1998       1997         1998        1997
                                   ------     ------      -------     -------

     Interest expense              $  988     $2,335      $ 3,333     $ 2,930
     Expenses from sales of
       accounts receivable          4,993      4,737       10,570       9,001
     Amortization expense           2,068        470        4,180         862
     Other                          1,122       (101)       2,029        (471)
                                   ------     ------      -------     -------

                                   $9,171     $7,441      $20,112     $12,322
                                   ======     ======      =======     =======

NOTE C - RESTRUCTURING AND OTHER ONE-TIME CHARGES

In February,  1998, the Company initiated a plan to restructure the Company into
two  independent  businesses  -  a  distribution  business  operated  through  a
wholly-owned  subsidiary,  Pinacor Inc.,  and an integration  business  operated
through a wholly-owned subsidiary, MicroAge Integration Co. ("Integration").  In
connection  with this plan, the Company  recorded $5.6 million of  restructuring
and other  one-time  charges  ($3.2  million,  or $0.16 per share,  after taxes)
during the second quarter of fiscal 1998.

The  restructuring and other one-time charges included $3.6 million for employee
termination  benefits,  $1.1  million  for  the  closing  and  consolidation  of
redundant   locations,   and  $0.9  million  for  other  costs  related  to  the
restructuring,  primarily  one-time costs incurred in  establishing  Pinacor and
Integration  as  separate  businesses.  The  charges  associated  with  employee
termination  benefits consist  primarily of severance pay for  approximately 250
associates.  The  reductions  occurred in virtually all areas of the Company and
were  completed  by May 3, 1998.  As of May 3, 1998,  $1.9  million  remained in
accrued liabilities  representing:  $0.7 million related to employee termination
benefits;  $0.9 million related to facility closings; and $0.3 million primarily
related to costs of establishing Pinacor and Integration as separate businesses.

                                       6
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Certain statements  contained in this Item may be  "forward-looking  statements"
within the  meaning of The  Private  Securities  Litigation  Reform Act of 1995.
These  forward-looking  statements  may include  projections  of revenue and net
income and issues that may affect revenue or net income;  projections of capital
expenditures;  plans for  future  operations;  financing  needs or plans;  plans
relating to the Company's products and services; and assumptions relating to the
foregoing.  Forward  looking  statements  are  inherently  subject  to risks and
uncertainties,  some of which cannot be predicted or  quantified.  Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward-looking information. Some of the important factors
that could cause the Company's  actual results to differ  materially  from those
projected in forward-looking statements made by the Company include, but are not
limited to, the following:  intense competition;  narrow margins;  dependence on
supplier  incentive  funds;  product  supply  and  dependence  on  key  vendors;
potential  fluctuations  in  quarterly  results;  risks of declines in inventory
values;  no assurance of successful  acquisitions  or  investments;  the capital
intensive nature of the Company's business;  dependence on information  systems;
year  2000  issues;   dependence  on  independent   shipping  companies;   rapid
technological change; and possible volatility of stock price.  Reference is made
to Exhibit 99.1 of the Company's Report on Form 10-K for the year ended November
2,  1997  for  additional  discussion  of the  foregoing  factors.  The  Company
undertakes  no  obligations  to  publicly  update or revise any  forward-looking
statements, whether as a result of new information, future events or otherwise.

On November 14, 1997,  the Company issued shares of its common stock in exchange
for all of the outstanding  shares of a reseller  location.  The merger has been
accounted  for  as a  pooling  of  interests  and,  accordingly,  the  Company's
consolidated financial statements have been restated to include the accounts and
operations of the acquired  company for all periods  presented.  In addition,  a
1997  acquisition  originally  accounted  for as a pooling of interests has been
restated  under  the  purchase  method  of  accounting.  See  Note A of Notes to
Consolidated Financial Statements (Unaudited) for additional information.

In February,  1998, the Company initiated a plan to restructure the Company into
two  independent  businesses  -  a  distribution  business  operated  through  a
wholly-owned  subsidiary,  Pinacor, Inc. ("Pinacor") and an integration business
operated   through  a  wholly-owned   subsidiary,   MicroAge   Integration   Co.
("Integration").  These businesses now have separate  management teams,  operate
autonomously in their respective  marketplaces,  and contract with  headquarters
for a limited number of services, such as payroll processing,  employee benefits
and information services.  See "Restructuring and Other One-Time Charges" below.
In May, 1998, the Company  announced that it had retained an investment  banking
firm  to  help  explore  financial  options  for  Pinacor  designed  to  enhance
shareholder value.

                                       7
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the indicated  periods,  data as percentages
of total revenue:
<TABLE>
<CAPTION>
                                                           Quarter ended
                               --------------------------------------------------------------
                                  May 3,      Feb. 1,      Nov. 2,      Aug. 3,      May 4,
                                  1998         1998         1997         1997         1997
                               ----------   ----------   ----------   ----------   ----------
<S>                            <C>          <C>          <C>          <C>          <C>
Revenue (in thousands)         $1,326,950   $1,179,011   $1,318,871   $1,117,275   $1,058,304
Cost of sales                        93.6%        93.7%        93.2%        93.1%        93.3%
                               ----------   ----------   ----------   ----------   ----------
Gross profit                          6.4          6.3          6.8          6.9          6.7

Operating expenses                    6.0          6.2          5.2          5.2          5.0
Restructuring and other one-
time charges                          0.4          0.0          0.0          0.0          0.0
                               ----------   ----------   ----------   ----------   ----------
Operating income                      0.0          0.1          1.6          1.7          1.7

Other expenses - net                  0.7          0.9          0.6          0.7          0.7
                               ----------   ----------   ----------   ----------   ----------
Income (loss) before income
taxes                                (0.7)        (0.8)         1.0          1.0          1.0

Income tax provision (benefit)       (0.3)        (0.3)         0.4          0.4          0.4
                               ----------   ----------   ----------   ----------   ----------
Net income (loss)                    (0.4)%       (0.5)%        0.6%         0.6%         0.6%
                               ==========   ==========   ==========   ==========   ==========
</TABLE>

TOTAL REVENUE. Total revenue of $1.3 billion increased $269 million, or 25%, for
the quarter ended May 3, 1998 as compared to the quarter ended May 4, 1997. This
revenue increase (before intercompany  eliminations) included a $176 million, or
17%, increase in Pinacor (distribution  business) revenue and a $116 million, or
34%, increase in Integration  revenue.  The increase in revenue was attributable
to  sales to  resellers  added  since  May 4,  1997,  increased  demand  for the
Company's  major  suppliers'  products,  the  Company's  addition of new product
offerings, the growth of the microcomputer products industry and acquisitions of
reseller locations.

Total revenue increased $563 million, or 29%, for the 26 weeks ended May 3, 1998
as compared to the 26 weeks ended May 4, 1997.  This  revenue  increase  (before
intercompany  eliminations)  included a $423 million, or 23% increase in Pinacor
revenue and a $248 million, or 37% increase in Integration revenue.

GROSS PROFIT PERCENTAGE.  The Company's gross profit percentage was 6.4% for the
quarter ended May 3, 1998 and 6.7% for the quarter ended May 4, 1997.  The gross
profit  percentage  was 6.3% for the 26 weeks  ended May 3, 1998 as  compared to
6.8% for the 26 weeks ended May 4, 1997.

The  decrease  in the  Company's  gross  profit  percentage  was due to  several
factors. In Pinacor, the Company's distribution business, gross margins on sales
to reseller  customers  decreased  due to increased  competitive  pressures.  In
addition,  supplier  incentive funds were lower as a percentage of total Pinacor
revenue  and net freight  expense  increased  as a  percentage  of revenue.  The
freight  expense  increase as a  percentage  of revenue was  primarily  due to a
decrease  in the  average  selling  price  per  pound  of  product  shipped.  In
Integration,  margins on product  sales to end-user  customers  decreased due to
competitive  pricing pressures.  The decrease in Integration product margins was
partially  offset by an  increase  in service  revenue,  which has higher  gross
margins than product revenue.

                                       8
<PAGE>
OPERATING EXPENSES. As a percentage of revenue, operating expenses were 6.0% for
the quarter  ended May 3, 1998  compared  to 5.0% for the  quarter  ended May 4,
1997.  Operating  expenses  increased $27 million to $80 million for the quarter
ended May 3, 1998,  as  compared  to the  quarter  ended May 4, 1997.  Operating
expenses increased from $99 million, or 5.1% of revenue,  for the 26 weeks ended
May 4, 1997 to $153 million,  or 6.1% of revenue,  for the 26 weeks ended May 3,
1998. The increase in operating  expenses was primarily in Integration,  and was
attributable to acquisitions of reseller  locations (which generally have higher
gross  margin  and  operating  expense  percentages  than  the  Company's  other
businesses), the costs associated with assimilating these acquisitions, start-up
costs of several new locations,  and the build-up of  infrastructure  associated
with Integration's increasing levels of service revenue.

RESTRUCTURING AND OTHER ONE-TIME  CHARGES.  In connection with the restructuring
plan discussed  above, the Company recorded a $5.6 million charge ($3.2 million,
or $0.16 per share,  after  taxes) for the second  quarter of fiscal  1998.  The
restructuring  and other  one-time  charges  included  $3.6 million for employee
termination  benefits,  $1.1  million  for  the  closing  and  consolidation  of
redundant   locations   and  $0.9  million  for  other  costs   related  to  the
restructuring,  primarily  one-time costs incurred in  establishing  Pinacor and
Integration  as  separate  businesses.  The  charges  associated  with  employee
termination  benefits consist  primarily of severance pay for  approximately 250
associates.  The  reductions  occurred in virtually all areas of the Company and
were substantially completed by May 3, 1998.

OTHER  EXPENSES - NET.  Other  expenses - net  increased to $9.1 million for the
quarter  ended May 3, 1998 from $7.4 million for the quarter  ended May 4, 1997.
Other  expenses - net  increased to $20.1  million for the 26 weeks ended May 3,
1998 from $12.3  million for the 26 weeks ended May 4, 1997.  This  increase was
primarily  due to  increases  in average  daily  borrowings  to  support  higher
inventory and accounts receivable levels and to increased  amortization  expense
associated with goodwill from acquisitions.

SUPPLIER INCENTIVE FUNDS

The Company  receives  funds from  certain  suppliers  which are earned  through
marketing programs or meeting purchasing or other objectives  established by the
supplier.  A large  portion of the  incentives  are  passed on to the  Company's
customers.  However, a portion of the incentives positively impact the Company's
income.  There can be no assurance  that these programs will be continued by the
suppliers.  A  substantial  reduction  in the  supplier  funds  available to the
Company would have an adverse effect on the Company's results of operations.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The Company's  operating results may vary  significantly from quarter to quarter
depending  on certain  factors,  including,  but not limited to,  demand for the
Company's information  technology products and services,  the amount of supplier
incentive  funds  received by the Company,  the results of acquired  businesses,
product availability, competitive conditions, new product introductions, changes
in customer order patterns and general economic conditions.  In particular,  the
Company's  operating  results are sensitive to changes in the mix of product and
service  revenues,  product margins,  inventory  adjustments and interest rates.
Although the Company  attempts to control its expense  levels,  these levels are
based, in part, on anticipated revenues.  Therefore, the Company may not be able
to control spending in a timely manner to compensate for any unexpected  revenue
shortfall. As a result, quarterly period-to-period  comparisons of the Company's
financial  results are not necessarily  meaningful and should not be relied upon
as an  indication  of future  performance.  In addition,  although the Company's

                                       9
<PAGE>
financial performance has not exhibited significant seasonality in the past, the
Company and the computer industry in general tend to follow a sales pattern with
peaks  occurring  near the end of the calendar  year,  due  primarily to special
supplier promotions and year-end business purchases.

LIQUIDITY AND CAPITAL RESOURCES

The Company has  financed  its growth and cash needs to date  primarily  through
working capital financing facilities,  bank credit lines, common stock offerings
and cash generated from  operations.  The primary uses of cash have been to fund
increases in inventory and accounts  receivable  resulting from increased sales.
If the Company is successful in achieving  continued revenue growth, its working
capital requirements are likely to increase.

The  Company has  acquired or invested  in, and intends to acquire or invest in,
resellers to increase core service competencies, expand the Company's geographic
coverage in key market areas, and strengthen the Company's direct  relationships
with end-user customers. Acquisitions or investments may be made utilizing cash,
stock, or a combination of cash and stock.

Cash provided by operating activities was $72 million for the 26 weeks ended May
3, 1998 as  compared  to cash used of $23  million for the 26 weeks ended May 4,
1997.  The increase was  primarily due to a change in cash provided by inventory
and  accounts  payable.  During the 26 weeks ended May 3, 1998,  $74 million was
provided by changes in inventory  and accounts  payable  compared to $61 million
used by changes in inventory and accounts  payable during the 26 weeks ended May
4,  1997.  This was  partially  offset  by a  change  in cash  used by  accounts
receivable.  During the 26 weeks ended May 3, 1998, $15 million of cash was used
by changes in accounts  receivable compared to $6 million provided by changes in
accounts receivable during the 26 weeks ended May 4, 1997.

The number of days cost of sales in ending  inventory  increased from 35 days at
November 2, 1997 to 38 days at May 3, 1998. The number of days' cost of sales in
ending accounts payable increased from 49 days at November 2, 1997 to 53 days at
May 3, 1998. The number of days' sales in ending accounts receivable was 19 days
at May 3, 1998  compared to 16 days at November 2, 1997.  The  receivables  days
adjusted  for  sold  receivables  were 34 days  and 35 days at May 3,  1998  and
November 2, 1997, respectively.

Cash used in investing activities increased from $18 million during the 26 weeks
ended May 4, 1997 to $28  million  during the 26 weeks  ended May 3, 1998 due to
increased  purchases of property and equipment as a result of increased spending
for  electronic  commerce  initiatives  and  capacity  expansion  in systems and
facilities.

Cash used in financing  activities was $31 million during the 26 weeks ended May
3, 1998 compared to cash  provided of $50 million  during the 26 weeks ended May
3, 1997, primarily due to a change in net borrowings under the Company's line of
credit between the periods.

The  Company  maintains  three  financing  agreements  (the  "Agreements")  with
financing  facilities totaling $675 million.  The Agreements include an accounts
receivable facility (the "A/R Facility") and inventory financing facilities (the
"Inventory Facilities").

Under the A/R  Facility,  the  Company  has the right to sell  certain  accounts
receivable  from time to time, on a limited  recourse  basis, up to an aggregate
amount of $350 million sold at any given time. At May 3, 1998, the net amount of
sold accounts receivable was $233 million.

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<PAGE>
The Inventory  Facilities provide for borrowings up to $325 million.  Within the
Inventory  Facilities,  the  Company  has lines of credit  for the  purchase  of
inventory from selected product suppliers  ("Inventory Lines of Credit") of $175
million  and  a  line  of  credit  for  general  working  capital   requirements
("Supplemental Line of Credit") of $150 million. Payments for products purchased
under the Inventory  Lines of Credit vary depending  upon the product  supplier,
but  generally  are due  between  45 and 60 days  from the date of the  advance.
Amounts  borrowed under the Supplemental  Line of Credit may remain  outstanding
until the  expiration  date of the  Agreements  (August  2000).  No  interest or
finance  charges are payable on the  Inventory  Lines of Credit if payments  are
made when due. At May 3, 1998,  the Company had $160 million  outstanding  under
the Inventory Lines of Credit  (included in accounts payable in the accompanying
Balance Sheets), and nothing outstanding under the Supplemental Line of Credit.

Of the $675 million of financing  capacity  represented by the Agreements,  $282
million  was unused as of May 3,  1998.  Utilization  of the  unused  portion is
dependent upon the Company's collateral availability at the time the funds would
be needed.  There can be no  assurance  that the Company  will be able to borrow
adequate amounts on terms acceptable to the Company.

Borrowings  under  the  Agreements  are  secured  by  substantially  all  of the
Company's  assets,  and the Agreements  contain certain  restrictive  covenants,
including  tangible  net worth  requirements  and ratios of debt to tangible net
worth and current assets to current liabilities. At May 3, 1998, the Company was
in compliance with these covenants.

In addition to the financing  facilities  discussed above, the Company maintains
an accounts  receivable  purchase  agreement (the "Purchase  Agreement")  with a
commercial  credit  corporation  (the  "Buyer")  whereby  the  Buyer  agrees  to
purchase,  from time to time at its option, on a limited recourse basis, certain
accounts  receivable of the Company.  Under the terms of the Purchase Agreement,
no finance  charges are assessed if the accounts are settled  within forty days.
At May 3, 1998,  the net amount of sold accounts  receivable  under the Purchase
Agreement was $13.4 million.

The Company also  maintains  trade credit  arrangements  with its  suppliers and
other creditors to finance  product  purchases.  A few major suppliers  maintain
security interests in their products sold to the Company.

The  unavailability of a significant  portion of, or the loss of, the Agreements
or trade  credit  from  suppliers  would have a material  adverse  effect on the
Company.

Although the Company has no material capital commitments, the Company expects to
make capital  expenditures of  approximately  $5 to $10 million during the third
quarter of fiscal 1998.

INFLATION

The Company  believes that inflation has generally not had a material  impact on
its operations.

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<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits

            11 - Calculation of Net Income (Loss) Per Common Share

            27 - Financial Data Schedule

       (b)  Report on Form 8-K

            The  Company  did not  file any  Reports  on Form 8-K
            during the quarter ended May 3, 1998.


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<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                           MICROAGE, INC.
                                           (Registrant)



Date: January 28, 1999                  By: /s/ Jeffrey D. McKeever
                                           --------------------------------
                                           Jeffrey D. McKeever
                                           Chairman of the Board and
                                           Chief Executive Officer



Date: January 28, 1999                  By: /s/ James R. Daniel
                                           --------------------------------
                                           James R. Daniel
                                           Senior Vice President
                                           Chief Financial Officer and Treasurer


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