SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q

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

                For the Quarterly Period Ended December 31, 1998


                                       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 0-25309
                                    VMIC, INC
             (Exact name of registrant as specified in its charter)

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

          DELAWARE                                          63-09172
(State or other jurisdiction of                          (I.R.S.Employer
 incorporation or organization)                         Identification no.)


             12090 S. Memorial Parkway Huntsville Alabama 35803-3308
                                 (256) 880-0444
     (Address, including zip code and telephone number of principal offices)
                          ----------------------------

                                    NO CHANGE
       (Former name, address and fiscal year if changed since last report)
                          ----------------------------

     Indicate  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 reports),  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  issuer's  classes of
common stock, as of the latest practical date.

                          COMMON STOCK, $.10 PAR VALUE
                4,447,586 SHARES OUTSTANDING ON December 31, 1998
                          ----------------------------




<PAGE>


                                   FORM 10-Q
                                   VMIC, Inc.

             QUARTERLY REPORT FOR THE PERIOD ENDED DECEMBER 31, 1998




                                      INDEX



                                                                           Page

Part I.    FINANCIAL INFORMATION
Item 1     Financial Statements

           Statements of Income for the Three Months Ended
           December 31, 1998 and December 31, 1997 (Unaudited).............3


           Balance Sheets as of December 31, 1998 (Unaudited)
           and September 30, 1998..........................................4


           Statements of Cash Flows for the Three Months
           Ended December 31, 1998 and December 31, 1997  (Unaudited)......5


           Notes to Condensed Financial Statements (Unaudited).............6


Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations ............................8



Part II.   OTHER INFORMATION


           Signatures......................................................12















                                        2
<PAGE>

PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>

VMIC, Inc.
Condensed Balance Sheets

                                                                                       December 31,     December 31
                                                                                           1998               1998
                                     ASSETS                                            (Unaudited)
<S>                                                                                 <C>                  <C>

Current assets:
    Cash and cash equivalents
                                                                                                        $         527,972
    Accounts  receivable  (includes  allowance for doubtful accounts of $396,383
      and $384,383 at December 31, 1998 and September 30, 1998,
      respectively)                                                                  $      4,393,515           4,366,330
    Inventories                                                                             5,425,108           4,943,239
    Prepaid expenses                                                                          323,540             250,733
    Income tax receivable                                                                     573,771             573,771
    Deferred income taxes                                                                     954,929             954,929
                                                                                     -----------------  ------------------

           Total current assets                                                            11,670,863          11,616,974
Property, plant, and equipment, net                                                         8,732,213           9,033,922
Purchased product and software costs, net                                                     982,079             967,852
Software development costs                                                                  4,243,540           3,543,030
                                                                                     -----------------  ------------------

                                                                                     $     25,628,695   $      25,161,778
                                                                                     =================  ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current
liabilities:
    Accounts payable                                                                     $  2,025,260   $       2,367,397
    Bank overdraft                                                                            204,139
    Current portion of notes, mortgages, and capital leases                                 2,394,437           2,104,777
    Accrued liabilities                                                                     1,796,764           2,421,180
                                                                                     -----------------  ------------------

           Total current liabilities                                                        6,420,600           6,893,354
Notes, mortgages, and capital leases, less current portion above                            6,744,280           5,713,086
Deferred income taxes                                                                         808,101             808,101
                                                                                     -----------------  ------------------

           Total liabilities                                                               13,972,981          13,414,541
                                                                                     -----------------  ------------------

Stockholders' equity:
    Common stock, par value $.10 (10,000,000  shares  authorized;  4,528,280 and
      4,462,917 shares issued and outstanding at December 31, 1998
      and September 30, 1998, respectively)                                                   452,828             446,292
    Additional paid-in capital                                                              6,625,879           6,432,799
    Retained earnings                                                                       4,577,007           4,868,146
                                                                                     -----------------  ------------------

           Total stockholders' equity                                                      11,655,714          11,747,237
                                                                                     -----------------  ------------------

                                                                                     $     25,628,695   $      25,161,778
                                                                                     =================  ==================
</TABLE>

See notes to condensed financial statements.


                                                                   3


<PAGE>


<TABLE>
<CAPTION>

VMIC, Inc.
Condensed Statements of Income
(Unaudited)                                                                   Three months ended
                                                                      December 31,       December 31,
                                                                        1998               1997
<S>                                                               <C>                <C>
Sales:
Hardware sales                                                    $      7,504,586   $       7,437,668
Software sales                                                             200,511             146,563
                                                                  -----------------  ------------------

                                                                  -----------------  ------------------
        Total sales                                                      7,705,097           7,584,231
                                                                  -----------------  ------------------

Cost and expenses:
    Cost of products sold                                                2,851,280           2,530,492
    Research and development expense                                     1,582,253           1,478,978
    Selling, general, and administrative expense                         3,535,523           3,096,930
                                                                  -----------------  ------------------

                                                                         7,969,056           7,106,400
                                                                  -----------------  ------------------

           Operating (loss) income                                       (263,959)             477,831

Other income (expense)                                                   (138,302)           (122,304)
                                                                  -----------------  ------------------

           (Loss) income before income taxes                             (402,261)             355,527

Benefit (provision) for income taxes                                       111,110           (113,768)
                                                                  -----------------  ------------------

           Net (loss) income                                      $      (291,151)   $         241,759
                                                                  =================  ==================

Net (loss) income per common and common equivalent share:
    Basic                                                                 $(0.065)              $0.058
                                                                  =================  ==================
    Diluted                                                               $(0.065)              $0.056
                                                                  =================  ==================

Weighted average common and common equivalent shares outstanding:
      Basic                                                              4,447,586           4,135,117
                                                                  =================  ==================
      Diluted                                                            4,447,586           4,284,973
                                                                  =================  ==================
</TABLE>

See notes to condensed financial statements..















                                                                   4


<PAGE>


<TABLE>
<CAPTION>

VMIC, Inc.
Condensed Statements of Cash Flows
                                                                                 Three months ended
                                                                             December, 31      December, 31
                                                                                1998             1997
<S>                                                                       <C>              <C>

Cash flows from operating activities:
    Net (loss) income                                                     $     (291,151)  $       241,759
     Adjustments to reconcile net (loss) income to net cash
     (used in) provided by operating activities:
        Depreciation and amortization                                             733,112          616,045
        Provision for losses on accounts receivable                                12,000           22,500
        Stock issued in lieu of cash compensation                                  20,700           37,500
        Gain on disposal of property and equipment                               (24,854)                -
        Change in operating assets and liabilities:
           Accounts receivable                                                   (39,185)         (31,684)
           Inventories                                                          (481,869)         (61,984)
           Prepaid expenses                                                      (72,807)         (38,974)
           Income tax receivable                                                (111,110)           13,768
           Accounts payable                                                     (342,145)          621,440
           Accrued liabilities                                                  (513,306)          115,991
                                                                          ---------------- ----------------
               Total adjustments                                                (819,464)        1,294,602
                                                                          ---------------- ----------------
               Net cash (used in) provided by operating activities            (1,110,615)        1,536,361
                                                                          ---------------- ----------------

Cash flows from investing activities:
    Capital expenditures                                                        (299,959)        (672,894)
    Software development costs and purchased product and software costs         (846,161)        (443,057)
    Proceeds from dispositions of property, plant,
     and equipment                                                                 24,854                0
                                                                          ---------------- ----------------
               Net cash used in investing activities                          (1,121,266)      (1,115,951)
                                                                          ---------------- ----------------

Cash flows from financing activities:
    Proceeds from issuance of long-term debt                                    1,320,854                0
    Principal payments on long-term debt                                                0        (606,413)
    Increase in bank overdraft                                                    204,139                0
    Proceeds from issuance of common stock                                        178,916        1,801,708
                                                                          ---------------- ----------------
               Net cash provided by financing activities                        1,703,909        1,195,295
                                                                          ---------------- ----------------
               Net (decrease) increase in cash and
                  cash equivalents                                              (527,972)        1,615,705
Cash and cash equivalents, beginning of year                                      527,972          339,101
                                                                          ---------------- ----------------

Cash and cash equivalents, end of period                                  $              0 $      1,954,806
                                                                          ================ ================

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                              $        170,000 $        138,000
                                                                          ================ ================

    Cash paid during the period for income taxes                          $              0 $        125,000
                                                                          ================ ================

See notes to condensed financial statements.


</TABLE>




                                        5
<PAGE>

                                   VMIC, Inc.
                     Notes to Condensed Financial Statements

1.       Basis of Presentation

 The accompanying  unaudited condensed  financial  statements of VMIC, Inc. (the
 Company) have been prepared by management in accordance with generally accepted
 accounting principles for interim financial information and in conjunction with
 the rules and  regulations of the Securities  and Exchange  Commission.  In the
 opinion of management, all adjustments necessary for a fair presentation of the
 interim condensed financial statements have been included,  and all adjustments
 are of a normal and recurring nature. The condensed financial  statements as of
 and  for  the  interim  period  ended  December  31,  1998  should  be  read in
 conjunction  with the  Company's  financial  statements  as of and for the year
 ended  September  30, 1998  included in the  Company's  Form-10 filed March 29,
 1999.  Operating  results for the three months ended  December 31, 1998 are not
 necessarily  indicative  of the results that may be expected for the year ended
 September 30, 1999. The September 30, 1998 balance sheet data presented  herein
 was  derived  from  audited  financial  statements  but  does not  include  all
 disclosures required by generally accepted accounting principles.


 2.    Stock Options
No options to purchase shares of common stock were granted during the quarter to
employees under the Employee Stock Option Plan. Also, options to purchase 57,363
shares of common stock were exercised during the quarter.



  3.   Comprehensive Income



       The Company does not have any  difference  between net income as reported
and comprehensive income.































                                        6



<PAGE>

<TABLE>
<CAPTION>

                                                                  VMIC, Inc.
                                                  Notes to Financial Statements-(Continued)





  4.   Earnings Per Share

       A summary of the  calculation of basic and diluted  earnings per share is
as follows:

                                                                        Income                Shares             Per-Share
                                                                       (Numerator)         (Denominator)            Amount
                                                                 --------------------    -----------------    ----------------
                            Three months ended

                             December 31, 1998
      <S>                                                            <C>                   <C>                <C>

       Basic EPS:

          Loss available to common stockholders                       $   (291,151)        4,447,586          $   (0.065)

       Effect of dilutive securities:

          Stock Options                                                                            0



       Diluted EPS                                                    $   (291,151)        4,447,586          $   (0.065)



                                                                     ----------------    -----------------     ---------------
                              Three months ended

                               December 31, 1997
       Basic EPS:

          Income available to common stockholders                     $     241,759        4,135,117          $   0.058

       Effect of dilutive securities:

          Stock Options                                                                      149,856



       Diluted EPS                                                    $     241,759        4,284,973          $   0.056



</TABLE>

















                                                                   7


<PAGE>



                                   FORM 10-Q
                                   VMIC, Inc.



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

EXCEPT FOR  HISTORICAL  INFORMATION  CONTAINED  HEREIN,  THIS  QUARTERLY  REPORT
CONTAINS FORWARD-LOOKING  STATEMENTS AS DEFINED IN SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934.  SUCH  FORWARD-LOOKING  STATEMENTS  ARE SUBJECT TO VARIOUS
RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY
FROM  THOSE  PROJECTED  IN  THE  FORWARD-LOOKING  STATEMENTS.  THESE  RISKS  AND
UNCERTAINTIES ARE DISCUSSED IN MORE DETAIL IN THE COMPANY'S REGISTRATION ON FORM
10, AND IN THE  FOLLOWING  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL
CONDITION  AND RESULTS OF OPERATIONS  SECTION OF THIS  QUARTERLY  REPORT.  THESE
FORWARD-LOOKING  STATEMENTS  CAN BE  GENERALLY  IDENTIFIED  AS SUCH  BECAUSE THE
CONTENT OF THE  STATEMENTS  WILL  USUALLY  CONTAIN  SUCH WORDS AS THE COMPANY OR
MANAGEMENT  "BELIEVES,"  "ANTICIPATES,"  "EXPECTS," "PLANS," OR WORDS OF SIMILAR
IMPORT.  SIMILARLY,   STATEMENTS  THAT  DESCRIBE  THE  COMPANY'S  FUTURE  PLANS,
OBJECTIVES, GOALS OR STRATEGIES ARE FORWARD-LOOKING STATEMENTS.


OVERVIEW

         VMIC is a leading  independent  designer and  manufacturer  of embedded
computer  solutions  based upon a wide variety of open standard bus designs such
as VME, CPCI, PCI, PMC,  Multibus,  ISA, and special custom buses. The Company's
products  are  used  by  original  equipment  manufacturers  ("OEMs"),   systems
integrators  and  end-users  in  various  industries;   including  manufacturing
automation,   Telecommunications,   Simulation   and   Training,   environmental
monitoring, and Test and Measurement.

         The  Company  markets  and  sells  more  than  200  different  products
worldwide,   including   application-specific   embedded  computer   subsystems,
board-level  modules,  control and driver  software,  and network  products.  In
addition to offering standard  commercial  products,  the Company is involved in
the development of custom products for high-volume applications.

         VMIC  continues  to  invest  heavily  in new and  enhanced  technology,
including software,  and has focused its attention on highly vertical markets to
support faster growth, more consistent  profitability,  and enhanced shareholder
value.


COMPARISON OF OPERATING RESULTS FOR FISCAL FIRST QUARTER 1999
WITH FISCAL FIRST QUARTER 1998


         SALES.  Sales  increased  1.6 % to $7.70  million  for the  three-month
period ended December 31, 1998,  from $7.58 million for the  three-month  period
ended December 31, 1997. Hardware sales accounted for approximately $7.5 million
or 97 % of the Company's  sales for the  three-month  period ended  December 31,
1998,  compared to $7.4 million or 98 % of sales during the same period in 1997.
Of the  hardware  sales,  sales  of the  Company's  reflective  Memory  products
accounted for approximately $2.17 million or 28 % of the Company's sales for the
three-month period ended December 31, 1998, compared to $2.20 million or 29 % of
sales during the same period in 1997.  The Company's  software  sales of IOWorks
accounted for approximately  $201 thousand or 3 % of the Company's sales for the
three-month period ended December 31, 1998,  compared to $147 thousand or 2 % of
sales during the same period in 1997.  International  sales  increased 53.6 % to
$2.06 million for the  three-month  period ended  December 31, 1998,  from $1.34
million for the three-month period ended December 31, 1997.

                                       8
<PAGE>


    GROSS MARGINS.  The Company's  average gross margin decreased from 66.6 % in
the  three-month  period ended  December  31, 1997 to 63.0 % in the  three-month
period ended December 31, 1998. During this period the gross margin for hardware
decreased  from 67.5 % to 63.8 %and software  margins  decreased  from 54.6 % to
34.5  %.  This  increase  is  attributed  to  increased  sales  of  lower-margin
single-board  PC  computers,  increased  warranty  expense and the  amortization
associated with the Company's capitalized software product investment

         COST OF SALES. Cost of sales increased 12.6% from $2.53 million for the
three-month  period ended December 31, 1997 to $2.85 million for the three-month
period ended December 31, 1998.  This increase is attributed to increased  sales
of lower-margin  single-board PC computers,  increased  warranty expense and the
amortization   associated  with  the  Company's   capitalized  software  product
investment.

         GROSS PROFIT. For the three-month period ended December 31, 1998, gross
profit  decreased 4 % to $4.85 million,  from $5.05 million for the  three-month
period ended December 31, 1997.  This decrease is attributed to increased  sales
of lower-margin  single-board PC computers,  increased  warranty expense and the
amortization   associated  with  the  Company's   capitalized  software  product
investment.


         SELLING,  GENERAL,  AND  ADMINISTRATIVE  EXPENSES.  For the three-month
period ended December 31, 1998,  selling,  general,  and  administrative  (SG&A)
expenses  increased  approximately  14 %, from $3.10 million for the three-month
period ended December 31, 1997 to $3.50 million for the three-month period ended
December  31, 1998.  This  increase is  primarily  attributed  the growth of the
Company's sales  organization.  During the first quarter,  the Company addressed
its  increasing  SG&A expenses by reducing its  administrative  work force.  The
Company  believes that SG&A cost reductions  will be realized  commencing in the
second quarter of the 1999 fiscal year.


         RESEARCH AND  DEVELOPMENT  EXPENSE.  For the  three-month  period ended
December 31, 1998, research and development (R&D) expenses increased 6.7 %, from
$1.48  million  for the  three-month  period  ended  December  31, 1997 to $1.58
million for the  three-month  period ended  December 31, 1998.  R&D expense as a
percentage of sales increased to 20.5 for the three-month  period ended December
31, 1998 from 19.5 % in the  three-month  period ended  December  31, 1997.  The
Company's increased R&D expenses resulted from increased investments in software
development.  During the first quarter, the Company addressed its increasing R&D
expenses by reducing its R&D work force.


         INTEREST  EXPENSE.  Interest  expenses  increased  23.2  %,  from  $138
thousand for the three-month period ended December 31, 1997 to $170 thousand for
the  three-month  period ended December 31, 1998. This increase is attributed to
the  construction  loans  for the  new  sales  building,  increases  in  capital
investments  for machinery and computers,  and interest on the Company's line of
credit.


     INCOME TAXES.  Income taxes as a percentage of income before taxes was 27.6
% in the three-month period ended December 31, 1997 as compared to 32.0 % in the
three-month period ended December 31, 1997.

         EARNINGS PER SHARE. For the three-month period ended December 31, 1998,
net loss per weighted  average common and common  equivalent  share was $(0.065)
per  basic  share  compared  to net  income of  $0.058  per basic  share for the
three-month  period ended  December 31, 1997. For the  three-month  period ended
December 31, 1998, net loss per weighted  average  common and common  equivalent
share, assuming dilution,  was $(0.065) per diluted share compared to net income
of $0.056 per diluted share for the three-month period ended December 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES

      Historically, the Company's cash flow from operations and available credit
facilities  have provided  adequate  liquidity and working capital to fully fund
the  Company's  operational  needs.  As of December 31, 1998,  the  Company's $7
million  working  line of  credit  availability  was $5.83  million,  and its $2
million equipment line of credit availability was $890,000

                                        9
<PAGE>


      Working  capital was $4.7 million and $5.3  million at September  30, 1998
and December 31, 1998, respectively. Cash used in operating activities was$(1.1)
million  for the three  months  ended  December  31,  1998 as  compared  to cash
provided by  operating  activities  of $1.5  million for the three  months ended
December 31, 1997 this decrease occurred as a result of the net loss experienced
for the quarter  ended  December  31, 1998 and changes in  operating  assets and
liabilities.  Cash used for investing activities was $(1.1) million for both the
three  months  ended  December  31, 1998 and 1997.  Cash  provided by  financing
activities was $1.7 million and $1.2 million for the three months ended December
31, 1998 and 1997, respectively.


The Company  believes that its  financial  resources,  including its  internally
generated  funds and debt capacity,  will be sufficient to finance the Company's
current operations and capital expenditures for the next 12 months.

EFFECTS OF INFLATION

      Substantially  all  contracts  awarded to the  Company  have been based on
proposals which reflect estimated cost increases due to inflation. Historically,
inflation has not had a significant impact on the Company.


YEAR 2000

      OVERVIEW.  Historically,  certain computerized systems have had two digits
rather than four digits to define the  applicable  year,  which could  result in
recognizing  a date using "00" as the year 1900 rather than the year 2000.  This
could cause significant  software failures or  miscalculations  and is generally
referred to as the "Year 2000" problem.

       The Company  recognizes  that the impact of the Year 2000 problem extends
beyond  its  computer   hardware  and  software  and  may  affect   utility  and
telecommunication  services,  as well as the systems of customers and suppliers.
The Year 2000  problem  is being  addressed  by a team  within the  Company  and
progress is  reported  periodically  to  management.  The Company has  committed
resources to conduct  extensive risk assessments and to take corrective  action,
where appropriate, within each of the following areas:


       VMIC PRODUCTS.  VMIC has initiated  extensive  internal Year 2000 testing
and  analysis  of its  products.  The  Company  believes  that a majority of its
products are Year 2000 compliant and VMIC anticipates  maintaining compliance in
future revisions of any product that is currently compliant.


       INTERNAL  INFORMATION SYSTEMS. The Company's internal information systems
utilize hardware and software from several commercial suppliers. The Company has
investigated  its internal  information  systems for Year 2000  compliance,  and
certain  modifications  have already been  identified  and corrected on critical
systems to ensure that the  Company's  operations  will be Year 2000  compliant.
This effort will continue throughout 1998 and 1999.


       THIRD PARTIES. The Company has had initial communications with certain of
its  significant  suppliers and customers to evaluate their Year 2000 compliance
plans,  state of readiness  and to determine  the extent to which the  Company's
systems may be  affected by the failure of others to remedy  their own Year 2000
issues.  VMIC is  conducting a Year 2000  certification  program with all of its
critical  suppliers,  which will be completed  by the end of 1998.  In addition,
Year 2000  compliance is a prerequisite to new supplier  relationships.  VMIC is
also in the process of distributing a Year 2000 assessment form to other parties
in order to  provide  VMIC  with  further  information  as to  their  Year  2000
conversion  progress.   However,  the  Company  has  received  only  preliminary
responses  from such  parties  and has not  independently  confirmed  all of the
information received from other parties with respect to the Year 2000 issues. As
such, there can be no assurance that such other parties will complete their Year
2000  conversion  in a timely  fashion or will not  suffer a Year 2000  business
disruption that may adversely affect the Company's business, financial condition
or results of operations.

       CONTINGENCY  PLANS.  Because  the  Company's  Year 2000  conversions  are
expected to be completed  prior to any  potential  disruption  to the  Company's
business,  VMIC has not yet completed the  development of a  comprehensive  Year
2000  specific  contingency  plan.  If VMIC  determines  that its business is at
material risk of disruption due to the Year 2000 problem,  or  anticipates  that
its Year 2000 conversion will not be completed in a timely fashion,  the Company
will work to enhance its contingency plan.



                                       10
<PAGE>

       COST FOR YEAR 2000  COMPLIANCE.  The Company believes that the total cost
of  Year  2000  compliance  activity  will  not be  material  to  the  Company's
operations,  liquidity and capital resources. VMIC estimates that the total cost
for its Year 2000 compliance will be approximately $55,600, which represents 833
hours of internal  analysis,  modification  and testing and $15,000 for hardware
and software  upgrades.  As of December 31, 1998,  the Company had completed 450
hours of Year 2000 compliance work at a cost of $21,600.



       YEAR 2000 RISKS FACED BY VMIC.  Although  the Company  believes  that its
Year 2000 compliance  program is  comprehensive,  the Company may not be able to
identify,  successfully  remedy  or assess  all  date-handling  problems  in its
business  systems or operations or those of its  customers and  suppliers.  As a
result,  the Year 2000  problem  could have a materially  adverse  affect on the
Company's business financial condition or results of operation.












































                                       11


<PAGE>



                                   FORM 10-Q
                                   VMIC, Inc.

PART II - OTHER INFORMATION
SIGNATURES

MANAGEMENT REPRESENTATION


           The accompanying  unaudited  Balance Sheets at December 31, 1998, and
December 31, 1997 as well as the Statements of Income,  Statements of Changes in
Stockholders'  Equity and Statements of Cash Flows for the three months December
31, 1998, and 1997, have been prepared in accordance  with  instructions to Form
10-Q  and 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 only of normal recurring
accruals, considered necessary for a fair presentation have been included.





June 22, 1999
                                       By:Gordon Hubbert
Date
                                       Gordon Hubbert
                                       Vice President and Chief
                                       Financial Officer (Principal Financial
                                       and Accounting Officer)


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.



                                        VMIC, Inc.

June 22, 1999                            By:Carroll E. Williams

Date                                    Carroll E. Williams
                                        President and Chief
                                        Executive Officer
VMIC, Inc.



















                                       12