U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

                                (Amendment No. 1)


[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the fiscal year ended March 31, 1998

                                       OR



[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the transition period from ____________ to ____________


                          Commission File No.: 0-13117
                                               -------

                                MICROFRAME, INC.
                 ---------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                New Jersey                                22-2413505
       --------------------------------  ------------------------------------
        (State or Other Jurisdiction of   (IRS Employer Identification Number)
          Incorporation or Organization)

         21 Meridian Road, Edison, New Jersey                     08820
      ------------------------------------------               -----------
       (Address of Principal Executive Offices)                 (Zip Code)


Issuer's telephone number, including area code:  (732) 494-4440
                                                 ---------------

Securities registered under Section 12(b) of the Exchange Act:  None
                                                                ----

Securities registered under Section 12(g) of the Exchange Act: 
                                                  Common Stock, $.001 par value
                                                  -----------------------------

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                                              Yes [X]            No [ ]

[ ]      Check if there is no  disclosure  of  delinquent  filers in response to
         Item  405 of  Regulation  S-B is not  contained  in this  form,  and no
         disclosure will be contained, to the best of registrant's knowledge, in
         definitive proxy  information  statements  incorporated by reference in
         Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

The issuer's revenues for its most recent fiscal year totaled $10,217,911.

The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the  average of the bid and asked  prices as  reported  by the
National Quotation Bureau as of June 25, 1998 was approximately $17,531,345.

There were 5,296,479 shares of Common Stock outstanding as of June 25, 1998.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>



                                     PART I

This  amendment  to Form 10-KSB for the period  ended March 31, 1998 is filed to
amend  certain  portions of Item 10 and Item 11 of Form 10-KSB filed on July 14,
1998.

Item 10.  Executive Compensation.

                        Option Grants in Fiscal Year 1998

              The  following  table sets forth  certain  information  concerning
stock option grants during the year ended March 31, 1998 to the Named  Executive
Officers:
<TABLE>
<CAPTION>


                                            Individual Grants
                               ----------------------------------------------------------------------------------

                                                       Percent
                               Number of               of Total
                               Securities              Options                  Exercise
                               Underlying              Granted to               or Base
                               Options                 Employees in             Price                Expiration
Name                           Granted(#)              Fiscal Year              ($/Sh)               Date
----                           ----------              ------------             --------             ------------

<S>                        <C>                        <C>                   <C>                    <C>
Stephen M. Deixler             10,000(1)                     N/A                $1.50                9/17/01

Stephen B. Gray                75,000(2)                    4.2%                $1.75                05/04/07

Michael Radomsky               42,839(2)                    2.4%                $1.75                05/04/07

William H. Whitney             42,839(2)                    2.4%                $1.75                05/04/07

John F. McTigue                70,760(2)                    3.9%                $1.34                07/02/07

                               30,000                       2.5%                $1.34                07/02/07


</TABLE>


(1)        Represents  stock options granted to Mr. Deixler under the 1994 Stock
           Option  Plan in  consideration  of his  service  to the  Company as a
           director.

(2)        Represent  options issued under a Time  Accelerated  Restricted Stock
           Award Program (TARSAP).

                                       -2-

<PAGE>

                 Aggregated Option Exercises in Fiscal Year 1998
                        and Fiscal Year-End Option Values

              The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended March 31, 1998 by each of
the Named  Executive  Officers and the number and value of  unexercised  options
held by each of the Named Executive Officers on March 31, 1998.
<TABLE>
<CAPTION>



                                                                                               Value of
                                                                Number of Securities           Unexercised
                                                                Underlying Unexer-             In-the-Money
                             Shares                             cised Options                  Options at
                             Acquired on         Value          at FY-End(#)                   FY-End($)(1)
Name                         Exercise (#)        Realized($)    Exercisable/Unexercisable      Exercisable/Unexercisable
----                         ------------        -----------    -------------------------      --------------------------

<S>                        <C>                 <C>           <C>                          <C>                       
Stephen M. Deixler           --                  --             27,500/2,500                   $22,625/$3,275

Stephen B. Gray              --                  --             477,309/0                      $725,250/$0

Michael Radomsky             --                  --             142,239/0                      $192,007/$0

William H. Whitney           --                  --             142,184/0                      $192,018/$0

John F. McTigue              --                  --             100,760/0                      $145,094/$0

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

</TABLE>

(1)        The average  price for the Common  Stock as reported by the  National
           Quotation  Bureau on March 31,  1998 was  $2.78 per  share.  Value is
           calculated on the basis of the difference between the option exercise
           price and $2.78  multiplied  by the number of shares of Common  Stock
           underlying the options.

                                       -3-

<PAGE>




Item 11.  Security Ownership of Certain Beneficial Owners and Management.

           The following  table sets forth the number of shares of the Company's
Common Stock owned by each person or institution  who, as of June 29, 1998, owns
of record or is known by the  Company to own  beneficially,  more than five (5%)
percent of such securities, and by the Company's Named Executive Officers and by
its  Directors,  both  individually  and as a group,  and the percentage of such
securities owned by each such person and the group. Unless otherwise  indicated,
such persons have sole voting and investment power with respect to shares listed
as owned by them.
<TABLE>
<CAPTION>

Name and Address                                          Shares Owned                    Percent of Class
----------------                                          -------------                   ----------------

<S>                                                         <C>                             <C>  
Stephen M. Deixler (1)                                          760,532                         15.4%
371 Eagle Drive
Jupiter, Florida 33477

David I. Gould (2)                                              199,337                          4.0%
10844 White Aspen Way
Boca Raton, Florida  33428

Stephen B. Gray (3)(12)                                         477,309                          9.7%

Michael Radomsky (4)                                            356,643                          7.2%
8 Zaydee Drive
Edison, New Jersey 08837

William H. Whitney (5)                                          214,998                          4.5%
15 Jackson Avenue
Chatham, New Jersey 07928

Robert M. Groll (6)                                             100,852                          2.1%
52 Village Lane
Freehold, New Jersey 07728

John F. McTigue (7)(12)                                         100,760                          2.0%

Stephen P. Roma (8)                                             484,399                          9.8%
91 Durand Drive
Marlboro, New Jersey 07748

Special Situations Fund, III, L.P.(9)                           855,863                         16.7%

MGP Advisers Limited Partnership (9)                            855,863                         16.7%

AWM Investment Company, Inc. (9)                              1,157,133                         22.2%

Austin W. Marxe (9)                                           1,157,133                         22.2%

                                       -4-

<PAGE>




Jay Associates LLC (10)                                         480,000                          9.3%
1118 Avenue J
Brooklyn, New York  11230

Alpha Investments LLC (11)                                      336,000                          6.6%
5611 North 16th Street #300
Phoenix, Arizona  85016

Alexander C. Stark (12)(13)                                      85,000                          1.6%

Directors and executive
  officers as a group (9 Persons)                             2,779,830                         52.5%

</TABLE>

(1)        Does  not  include  214,436  shares  of  Common  Stock  owned  by Mr.
           Deixler's wife, mother, children and grandchildren as to which shares
           Mr. Deixler disclaims beneficial  ownership.  Includes 120,406 shares
           of Common Stock held by Merrill Lynch Pierce Fenner & Smith custodian
           f/b/o Stephen M. Deixler, IRA. Includes 27,500 shares of Common Stock
           which may be acquired pursuant to currently exercisable  non-employee
           director  options under the 1994 Plan.  Also  includes  53,330 shares
           issuable upon exercise of currently  exercisable  Class A and Class B
           Warrants of the 1996 Private Placement.

(2)        Includes 50,000 shares of Common Stock which may be acquired pursuant
           to currently  exercisable  options granted outside the Company's 1984
           Stock Option Plan and the 1994 Plan.  Also includes  52,500 shares of
           common Stock which may be acquired pursuant to currently  exercisable
           non-employee director options under the 1994 Plan.

(3)        Includes  400,000  shares  of  Common  Stock  which  may be  acquired
           pursuant  to  currently   exercisable  options  granted  outside  the
           Company's  1994 Plan.  Also  includes  77,309  shares of Common Stock
           which may be  acquired  pursuant  to  currently  exercisable  options
           granted under the Company's 1994 Plan.

(4)        Includes 90,000 shares of Common Stock which may be acquired pursuant
           to currently  exercisable  options granted outside the Company's 1994
           Plan.  Also  includes  52,339  shares  of Common  Stock  which may be
           acquired pursuant to currently  exercisable options granted under the
           Company's 1994 Plan.

(5)        Includes 90,000 shares of Common Stock which may be acquired pursuant
           to currently  exercisable  options granted outside the Company's 1994
           Plan.  Also  includes  52,184  shares  of Common  Stock  which may be
           acquired pursuant to currently  exercisable options granted under the
           Company's 1994 Plan.

(6)        Includes 56,684 shares of Common Stock which may be acquired pursuant
           to currently exercisable options granted under the 1994 Plan.

(7)        Includes  100,760  shares  of  Common  Stock  which  may be  acquired
           pursuant to currently exercisable options granted under the Company's
           1994 Plan.
                                       -5-

<PAGE>




(8)        Includes  47,877 shares of Common Stock held by  Donaldson,  Lufkin &
           Jenrette Securities Corporation custodian f/b/o Stephen P. Roma, IRA.
           Includes  8,400  shares of Common Stock held by Mr. Roma and his wife
           as joint tenants.  Also includes  27,500 shares of common Stock which
           may  be  acquired  pursuant  to  currently  exercisable  non-employee
           director  options under the 1994 Plan.  Also  includes  53,330 shares
           issuable upon exercise of currently  exercisable  Class A and Class B
           Warrants of the 1996 Private Placement. Does not include 1,200 shares
           of Common Stock held by Mr. Roma as  custodian  for his son or 29,108
           shares  owned by Mr.  Roma's  wife,  some of  which  are held in Mrs.
           Roma's  individual  retirement  account,  as to which shares Mr. Roma
           disclaims beneficial ownership.

(9)        Special  Situations  Fund III, L.P., a Delaware  limited  partnership
           (the "Fund"),  MGP Advisers Limited  Partnership,  a Delaware limited
           partnership  ("MGP"),  AWM  Investment  Company,   Inc.,  a  Delaware
           corporation  ("AWM"),  and Austin W. Marxe have filed a Schedule 13G,
           the  latest  amendment  of which  is  dated  January  27,  1997.  All
           presented  information is based on the  information  contained in the
           Schedule 13G and  subsequent  information  known to the Company.  The
           address of each of the reporting persons is 153 East 53rd Street, New
           York, New York 10022. The Fund has sole voting and dispositive  power
           with respect to 855,863 shares;  MGP has sole dispositive  power with
           respect to 855,863 shares;  AWM has sole voting power with respect to
           301,270 shares and sole  dispositive  power with respect to 1,157,133
           shares;  and Mr.  Marxe has sole voting power with respect to 301,270
           shares,  shared voting power with respect to 855,863  shares and sole
           dispositive power with respect to 1,157,133 shares.  MGP is a general
           partner  of  and  investment  advisor  to the  Fund.  AWM,  which  is
           primarily owned by Mr. Marxe, is the sole general partner of MGP. Mr.
           Marxe, the principal limited partner of MGP and the President of AWM,
           is  principally  responsible  for  the  selection,   acquisition  and
           disposition of the portfolio  securities by AWM on behalf of MGP, the
           Fund and another fund that  beneficially  owns shares included in the
           shares beneficially owned by AWM and Mr. Marxe. Also includes 267,242
           shares  issuable upon exercise of currently  exercisable  Class A and
           Class B Warrants of the 1996 Private  Placement  held by the Fund and
           MGP  and  364,422   shares   issuable   upon  exercise  of  currently
           exercisable  Class  A and  Class  B  Warrants  of  the  1996  Private
           Placement held by AWM and Mr. Marxe.

(10)       Includes   320,000   shares   issuable  upon  exercise  of  currently
           exercisable  Class  A and  Class  B  Warrants  of  the  1996  Private
           Placement.

(11)       Includes   224,000   shares   issuable  upon  exercise  of  currently
           exercisable  Class  A and  Class  B  Warrants  of  the  1996  Private
           Placement.

(12)       The address of such person  is c/o the Company, 21  Meridian Avenue, 
           Edison, New Jersey 08820.

(13)       Includes 35,000 shares of Common Stock which may be acquired pursuant
           to currently  exercisable  options  granted under the Company's  1994
           Plan.
                                       -6-



<PAGE>


                                   SIGNATURES

              In accordance with the  requirements of Section 13 or 15(d) of the
Securities  Exchange Act of 1934, the registrant caused this report to be signed
on its behalf by the  undersigned,  thereunto duly  authorized,  in this City of
Edison and State of New Jersey, on August 7, 1998.


                                         MICROFRAME, INC.



                                         By: /s/ Stephen B. Gray
                                             -----------------------------------
                                         Stephen B. Gray, President, Chief
                                         Executive Officer, and Chief Operating
                                         Officer