U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB


 [X]      Quarterly report under Section 13 or 15(d) of the Securities  Exchange
          Act of 1934

          For the quarterly period ended December 31, 1995

                                       or

 [ ]      Transition report under Section 13 or 15(d) of the Exchange Act

          For the transmission period from __________ to __________


                         Commission file number 0-13117

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

           New Jersey                                            22-2413505
           ----------                                            ----------
 (State or Other Jurisdiction of                                (IRS Employer
 Incorporation or Organization)                              Identification No.)

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

                                 (908) 494-4440
                       ---------------------------------
                (Issuer's Telephone Number, Including Area Code)


           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
      ---                 ---

There were 3,717,675 shares of Common Stock outstanding at February 7, 1996.


Transitional Small Business Disclosure Format:

Yes                  No    X
      ---                 ---
                                                                      

<PAGE>



                                MICROFRAME, INC.

                                   FORM 10-QSB

                     FOR THE QUARTER ENDED DECEMBER 31, 1995





PART I.              FINANCIAL INFORMATION                                  Page

Item 1.   Condensed Financial Information                                    2

          Condensed Balance Sheets as of December 31, 1995
          and March 31, 1995 (Unaudited)                                     3

          Condensed Statements of Income for the three 
          months ended December 31, 1995 and December 31, 1994;
          nine months ended  December 31, 1995 and 
          December 31, 1994 (Unaudited)                                      4

          Condensed Statements of Cash Flows for the nine
          months ended December 31, 1995 and December 31, 1994
          (Unaudited)                                                        5

          Notes to Condensed Financial Statements                          6-8

Item 2.   Management's Discussion and Analysis or Plan of Operation       9-11

PART II.             OTHER INFORMATION

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


SIGNATURES                                                                  13




<PAGE>



                          PART I. Financial Information


Item 1. CONDENSED FINANCIAL INFORMATION.

           The condensed financial statements included herein have been prepared
by the  registrant  without audit  pursuant to the rules and  regulations of the
Securities and Exchange  Commission.  Although the registrant  believes that the
disclosures  are  adequate to make the  information  presented  not  misleading,
certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed or omitted  pursuant to such rules and  regulations.  It is
suggested that these condensed financial  statements be read in conjunction with
the  financial  statements  and the notes thereto  included in the  registrant's
latest Annual Report on Form 10-KSB.

                                                                      
                                       -2-


<PAGE>




MicroFrame, Inc.
Condensed Balance Sheets

(unaudited)
<TABLE>
<CAPTION>

                                                                                       December 31,           March 31,
                                                                                            1995                  1995
<S>                                                                                   <C>                   <C>         
ASSETS
Current assets
      Cash and cash equivalents                                                       $     30,584          $    490,261
      Accounts receivable, less allowance for doubtful
           accounts of $75,000 and $75,000, respectively                                 1,530,345             1,912,304
      Inventory, net                                                                     1,489,412               775,540
      Deferred tax asset                                                                        --               400,000
      Prepaid expenses and other current assets                                             55,061                24,325
                                                                                      ------------          ------------
                     TOTAL CURRENT ASSETS                                                3,105,402             3,602,430

      Property and equipment at cost, net                                                  435,566               317,585
      Capitalized software, less accumulated amortization
           of $504,829 and $370,879, respectively                                          325,463               211,602
      Security deposits                                                                     44,554                31,412
      Excess of cost over fair value of net assets  acquired,  less  accumulated
           amortization of $3,138 and $0,
           respectively                                                                     98,472                     0
      Deferred tax asset                                                                   574,000               174,900
                                                                                      ------------          ------------
                     TOTAL ASSETS                                                     $  4,584,357          $  4,337,929
                                                                                      ============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities
           Short-term borrowings                                                      $    702,965          $          0
           Accounts payable                                                                552,044               354,427
           Accrued payroll and related liabilities                                         126,497               240,900
           Deferred income                                                                 232,292               202,478
           Other current liabilities                                                       134,254                62,730
                                                                                      ------------          ------------
                     TOTAL CURRENT LIABILITIES                                           1,748,052               860,535
                                                                                      ------------          ------------

Stockholders' equity
      Common stock - par value $.001 per share;  authorized  50,000,000  shares,
           issued 3,718,075 shares and outstanding  3,717,675 shares at December
           31, 1995; issued 3,687,198 shares
           and outstanding 3,686,798 shares at March 31, 1995                                3,718                 3,687
      Preferred stock - par value $10 per share;
           authorized 200,000 shares, none issued                                               --                    --
      Additional paid-in capital                                                         4,856,924             4,769,406
      Accumulated deficit                                                               (2,020,338)           (1,291,699)
                                                                                      ------------          ------------
                                                                                         2,840,304             3,481,394

      Less - Treasury stock, 400 shares, at cost                                            (4,000)               (4,000)
                                                                                      ------------          ------------
                     TOTAL STOCKHOLDERS' EQUITY                                          2,836,304             3,477,394
                                                                                      ------------          ------------

      Commitment and contingencies                                                              --                    --
                                                                                      ------------          ------------
                     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $  4,584,357          $  4,337,929
                                                                                      ============          ============
</TABLE>

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

                                       -3-

<PAGE>



MicroFrame, Inc.
Condensed Statements of Income

<TABLE>
<CAPTION>

                                                                Nine Months Ended                    Three Months Ended
                                                                  December 31,                          December 31,
                                                                  ------------                          ------------
                                                            1995                1994               1995                1994

<S>                                                      <C>                 <C>                <C>                 <C>       
Net sales                                                $4,334,057          $5,110,962         $1,727,117          $2,030,319
                                                         ----------          ----------         ----------          ----------

Costs and expenses
 Cost of goods                                            1,796,623           2,290,145            631,049             969,352
 Research and development expenses                          440,082             305,411            146,032             104,209
 Selling, general and administrative expenses             2,807,906           2,023,734            902,149             775,081
 Amortization of excess of cost over fair value
      of net assets acquired                                  3,138                   0              2,758                   0
                                                         ----------          ----------         ----------          ----------
                    TOTAL COSTS AND EXPENSES              5,048,049           4,619,290          1,681,988           1,848,642

Interest income                                               3,262               6,798                200               3,122
Interest expense                                            (17,910)               (229)           (16,216)               (229)
                                                         ----------          ----------         ----------          ----------


Income (loss) before income tax provision                  (728,640)            498,241             29,113             184,570
                                                         ==========          ==========         ==========          ==========

Income tax provision                                              0             199,300                  0              73,800
                                                         ----------          ----------         ----------          ----------

                     NET INCOME (LOSS)                   $ (728,640)         $  298,941         $   29,113          $  110,770
                                                         ==========          ==========         ==========          ==========


Per share

Primary
      Net income (loss) per share                        $    (0.20)         $     0.08         $     0.01          $     0.03
                                                         ----------          ----------         ----------          ----------


Shares used in computation                                3,699,178           3,646,242          3,717,885           3,655,131
                                                         ----------          ----------         ----------          ----------


Fully diluted
      Net income (loss) per share                        $    (0.20)         $     0.08         $     0.01          $     0.03
                                                         ----------          ----------         ----------          ----------


Shares used in computation                                3,699,178           3,956,420          3,717,885           3,939,265
                                                         ----------          ----------         ----------          ----------

</TABLE>

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

                                       -4-

<PAGE>



MicroFrame, Inc.
Condensed Statements of Cash Flows

<TABLE>
<CAPTION>

(unaudited)                                                                           Nine months ended
                                                                                        December 31,
                                                                                        ------------
                                                                                 1995                   1994
<S>                                                                          <C>                    <C>       
Cash flows from operating activities
Net income (loss)                                                            $ (728,640)            $  298,941
Adjustments to reconcile net income to net cash
      provided by operating activities
      Depreciation and amortization                                             243,054               151,440
      Deferred tax provision                                                         --               199,300
      (Increase) decrease in
           Accounts receivable, net                                             388,862              (621,413)
           Inventory                                                           (712,412)              362,372
           Prepaid expenses and other current assets                             16,259               (17,461)
           Security deposits                                                    (11,492)                   --
      Increase (decrease) in
           Accounts payable                                                     167,312               (57,941)
           Accrued payroll and related liabilities                             (118,843)              (16,566)
           Deferred income                                                       29,814                61,718
           Other current liabilities                                             46,486               (18,098)
                                                                           ------------          ------------
           Net cash provided by operating activities                           (679,600)              342,292
                                                                           ------------          ------------

Cash flows from investing activities
      Capital expenditures                                                     (442,220)             (186,193)
      Acquisition of European Business Associates                               (50,206)                   --
                                                                           ------------          ------------
           Net cash used in investing activities                               (492,426)             (186,193)
                                                                           ------------          ------------

Cash flows from financing activities
      Short-term borrowings                                                     702,965                27,433
      Insurance of common stock                                                   9,384                 3,000
                                                                           ------------          ------------
      Repayment of note payable                                                       0                     0
                                                                           ------------          ------------
           Net cash (used) provided by financing activities                     712,349                30,433
                                                                           ------------          ------------

Net (decrease) increase in cash and cash equivalents                           (459,677)              186,532

Cash and cash equivalents - beginning of period                                 490,261               505,317
                                                                           ------------          ------------

Cash and cash equivalents - end of period                                   $    30,584            $  691,849
                                                                           ============          ============

</TABLE>


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

    
                                       -5-


<PAGE>



                                MICROFRAME, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995
                                   (Unaudited)




NOTE 1 - CONDENSED FINANCIAL STATEMENTS:

The  condensed  balance  sheets as of December 31, 1995 and March 31, 1995,  the
condensed statements of operations for the nine month periods ended December 30,
1995 and 1994 and the  condensed  statements  of cash  flows for the nine  month
periods  then ended have been  prepared by the  Company  without  audit.  In the
opinion of management,  all  adjustments  (which  include only normal  recurring
adjustments)  necessary to present  fairly the  financial  position,  results of
operations and cash flows at December 31, 1995 and 1994 have been made.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  It is suggested that these condensed  financial
statements  be read in  conjunction  with the  financial  statements  and  notes
thereto as of March 31, 1995 and for the year then ended.

NOTE 2 - INVENTORY:

Inventory consists of the following:

                                    December 31, 1995          March 31, 1995
                                    -----------------          --------------

Raw materials                         $   817,997                $   347,962
Work in process                           517,023                    286,667
Finished goods                            154,392                    140,911
                                      -----------                -----------
           Total                      $ 1,489,412                $   775,540
                                      ===========                ===========



NOTE 3 - STOCKHOLDERS' EQUITY:

During the nine months ended December 31, 1995, stockholders' equity changed for
the following items:

                               Net income/(loss) of  $(728,640)

                               Issuance of common stock of  $87,549

                                                                      
                                       -4-

<PAGE>



                                MICROFRAME, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995
                                   (Unaudited)



NOTE 4 - NET INCOME PER SHARE:


The computation of earnings per common and common equivalent share is based upon
the weighted average number of common shares  outstanding during the period plus
(in  periods in which they have a dilutive  effect)  the effect of common  stock
equivalents, comprised solely of stock options. Fully diluted earnings per share
also reflect additional  dilution related to stock options due to the use of the
market  price at the end of the period,  when higher than the average  price for
the period.




NOTE 5 - ACQUISITION OF EUROPEAN BUSINESS ASSOCIATES:


On September  15,  1995,  MicroFrame  Europe  N.V., a newly formed  wholly-owned
subsidiary,  acquired all of the issued and outstanding  shares of capital stock
of  European  Business  Associates  BVBA  of  Brussels,   Belgium,  a  marketing
organization  which specializes in creating and managing  distribution  networks
and OEM relations for suppliers to the telecommunications  industry.  MicroFrame
Europe  N.V.  will  serve  as the  Company's  European  sales  and  distribution
coordinator  as well as provide  technical  support  services for the  Company's
authorized European distributors.

The acquisition  was accounted for under the purchase method of accounting.  The
results of the  operations  of  MicroFrame  Europe N.V.  are  included  with the
Company's results of operations from the date of acquisition. The Company issued
cash and common stock valued at $128,125,  assumed  liabilities of $59,783,  and
incurred  $35,075  in  additional  costs  related  to  the  acquisition.   Total
consideration as allocated to the assets acquired was as follows:


Current assets                                           $     90,226
Property and equipment                                         29,497
Other assets                                                    1,650
Goodwill                                                      101,610
                                                        -------------
                                                         $    222,983


                                                                      
                                       -5-

<PAGE>



                                MICROFRAME, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995
                                   (Unaudited)



The portion of the purchase price  allocated to goodwill is being amortized over
a 10-year period beginning September 15, 1995. The following unaudited pro forma
condensed  statement of operations  information has been prepared to give effect
to the  acquisition as if such  transaction had occurred at the beginning of the
periods presented.  The information  presented is not necessarily  indicative of
the results of future operations of the total Company.


Nine Months Ended                     Dec. 31, 1995                Dec. 31, 1994
-----------------                     -------------                -------------
Net revenues                        $    4,382,000                $   5,220,000
Net income (loss)                   $     (759,000)               $     299,000

Pro forma earnings per share        $         (.21)               $         .08


                                                                      
                                       -6-

<PAGE>



ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


RESULTS OF OPERATIONS

           Revenues for the quarter ended  December 31, 1995 were  $1,727,117 as
compared with revenues of $2,030,319 for the same quarter of the previous fiscal
year,  or a decrease of  approximately  14.9 %. The major portion of the revenue
decrease was attributable to decreased shipments to AT&T of Remote Port Security
Devices   (RPSDs)  for  their  Definity  PBX  customers.   As  a  result  of  an
"overstocked"  position  determined by AT&T in the quarter  ended  September 30,
1995, a reduction in purchase  order  activity  was  effected.  Revenues for the
current  quarter  ended  from AT&T were  approximately  65% lower  than the same
quarter in the previous year.  Exclusive of this  component,  quarterly  revenue
improved slightly  (approximately  1%) from the quarter ended December 31, 1994.
In addition,  AT&T's  purchase  order  activity  resumed in December for regular
monthly  quantities of the RPSDs. Two additional  significant  reductions in the
Company's  revenue stream which occurred in the quarter ended September 30, 1995
experienced  increases in the quarter ended December 31, 1995.  First,  revenues
from the Company's largest customer,  MCI, increased approximately threefold for
the quarter ended December  31,1995 versus the quarter ended September 30, 1995.
Second,  the  Company's  revenues  from  international  customers  increased  by
approximately $300,000 in the quarter ended December 31, 1995 versus the quarter
ended September 30,1995.  During the quarter ended December 31,1995, the Company
received a large purchase order commitment from Concert Management  Services,  a
joint venture  between MCI  Communications  and British  Telecommunications,  on
which initial shipments were made during the quarter.

           The  Company's  cost of goods sold  decreased  from $969,352 from the
quarter ended  December 31, 1994 to $631,049 for the quarter ended  December 31,
1995 as a result  of  decreased  shipment  levels.  However,  cost of goods as a
percentage  of sales  decreased  from 47.7% for the previous  comparable  fiscal
period to 36.5% for this fiscal period, reflecting improved systems,  purchasing
procedures  and more favorable  pricing  negotiated  with vendors.  Research and
development expenses,  net of capitalized software  development,  increased from
$104,209  in the  quarter  ended  December  31,  1994 to $146,032 in the current
fiscal  quarter,  an increase of 40%.  Research  and  development  expenses as a
percentage  of  sales  increased  from  5.1%  to  8.5%,   reflecting   increased
development of a next  generation set of products to be introduced in the fourth
fiscal quarter.  Selling,  general and  administrative  expenses  increased from
$775,081  for the prior  year's  comparable  fiscal  period to $902,149  for the
fiscal  period  ending  December  31,  1995.  This is a result of the  Company's
expansion  of  senior  management  and  its  sales  and  marketing  function  in
anticipation  of future  growth,  which growth did not  materialize in the prior
comparable  fiscal period.  The Company's  selling,  general and  administrative
expenses decreased by approximately 5% from the quarter ended September 30, 1995
as austerity measures were implemented,  including a hiring freeze and temporary
furloughs of approximately 15% of the Company's full-time employees.

                                                                      
                                       -7-

<PAGE>



           The Company's  operating  profit before  interest and taxes decreased
from $181,677  during the fiscal  quarter ended December 31, 1994 to $45,129 for
the fiscal  quarter  ended  December 31, 1995, as a direct result of the factors
described above.


FIRST NINE MONTHS OF FISCAL 1996 VERSUS FIRST NINE MONTHS OF FISCAL 1995

           Revenues  for the  nine-month  period  ended  December  31, 1995 were
$4,334,057 as compared with revenues of $5,110,962 for the comparable  period of
the previous fiscal year, a decrease of approximately  15.2 %. The major portion
of the revenue  decrease  was  attributable  to  decreased  shipments to AT&T of
Remote  Port  Security  Devices  (RPSDs) for their  Definity  PBX  customers  as
discussed above, as well as a significant  revenue shortfall  experienced in the
quarter ended September 30, 1995.

           While the Company sells a  substantial  portion of its product to its
top two  customers,  MCI and AT&T,  the  customer  base  exclusive  of these two
customers has increased  substantially,  both in terms of absolute  revenues and
percentage of overall revenues.  Revenues  excluding these top two customers for
the nine months ended  December 31, 1995  increased  by  approximately  $625,000
(33%) over the nine months  ended  December  31,1994,  while the  percentage  of
overall revenue from all other customers increased from approximately 38% in the
nine months  ended  December  31, 1994 to  approximately  58% in the nine months
ended December 31, 1995.

           The Company's cost of goods sold decreased from  $2,290,145  from the
nine months ended December 31, 1994 to $1,796,923 for the quarter ended December
31, 1995 as a result of decreased  shipment  levels.  Despite the lower  volume,
cost of goods as a  percentage  of sales  decreased  from 44.8% for the previous
comparable  fiscal  period to 41.5% for the current  fiscal  period , due to the
favorable factors noted previously.  Research and development  expenses,  net of
capitalized software  development,  increased from $305,411 for the period ended
December 31, 1994 to $440,082 in the current fiscal period,  an increase of 44%.
Research and  development  expenses as a percentage of sales increased from 6.0%
to 10.2%,  reflecting  an  increased  commitment  to the  development  of a next
generation  set  of  products.  Selling,  general  and  administrative  expenses
increased  from  $2,023,274  for the prior year's  comparable  fiscal  period to
$2,807,906 for the fiscal period ending  December 31, 1995.  This is a result of
the  Company's  expansion  of senior  management  and its  sales  and  marketing
function in anticipation  of future growth,  which growth did not materialize in
the prior comparable fiscal period.
 
           The Company's  operating  profit before  interest and taxes decreased
from  $491,672  during the nine months  ended  December 31, 1994 to an operating
loss before  interest  and taxes of  $713,992  for the nine month  period  ended
December 31, 1995.  This decrease was due to the Company's slow sales growth and
the increase in operating costs which were in anticipation of more rapid growth.



                                                                      
                                       -8-

<PAGE>



FINANCIAL CONDITION AND CAPITAL RESOURCES

           During the third quarter of fiscal year 1996, the Company's financial
condition  remained  steady with the previous  quarter ended September 30, 1995.
After a significant drop in working capital from $2,341,895 at March 31, 1995 to
$1,351,578  at  September  30,  1995,  the  working  capital  remained  level at
$1,357,349  at  December  31,  1995.  A much  tighter  focus on working  capital
management  was  instituted as the Company  stabilized  its financial  condition
after the decline in the quarter ended September 30, 1995.

           The   Company   has  a  credit   agreement   with   CoreStates   Bank
("CoreStates") for a credit line of $1,000,000 to finance future working capital
requirements,  collateralized by accounts receivable,  inventory,  equipment and
all other  assets of the  Company,  as well as a  $200,000  credit  facility  to
finance  purchases of machinery  and  equipment,  convertible  into a three-year
secured  term loan when  utilized.  As of  December  31,  1995,  the Company has
$582,000  outstanding  on its  credit  line and there is a current  term loan of
$120,965 outstanding under the credit facility.

           As a result of its stabilized  working capital  position and its line
of credit with  CoreStates,  the Company  believes that it will have  sufficient
capital to meet its financial requirements for the remainder of the fiscal year.

                                                                      
                                       -9-

<PAGE>



                           PART II. Other Information



Item 6.              Exhibits and reports on Form 8-K

                     (a)       Exhibits:

                                None.

                     (b)       Reports on Form 8-K:   
 
                                None.


                                                                      
                                      -10-

<PAGE>


                                   SIGNATURES

           In  accordance  with  the  requirements  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

Date:  February 8, 1996



                                               MICROFRAME, INC.


                                        /s/ Lonnie L. Sciambi
                                        --------------------------------
                                        Lonnie L. Sciambi, President and
                                        Chief Executive Officer



                                        /s/ Mark A. Simmons
                                        --------------------------------
                                        Mark A. Simmons, Chief Financial Officer
                                        (Principal Financial Officer)





                                      -11-