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 June 30, 1997

                                       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.
                                ----------------
              (Exact 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)

                                 (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 4,839,303 shares of Common Stock outstanding as of August 13, 1997.

Transitional Small Business Disclosure Format:

Yes  [_]              No [X]

<PAGE>





                         MICROFRAME, INC. AND SUBSIDIARY

                                   FORM 10-QSB

                       FOR THE QUARTER ENDED JUNE 30, 1997



PART I.  FINANCIAL INFORMATION                                              Page

Item 1.  Condensed Consolidated Financial Information                         2

         Condensed Consolidated Balance Sheets as of June 30, 1997
               (Unaudited) and March 31, 1997                                 3

         Condensed Consolidated Statements of Operations for the three
                    months ended June 30, 1997 and June 30, 1996 (Unaudited)  4

         Condensed Consolidated Statements of Cash Flows for the three
                    months ended June 30, 1997 and June 30, 1996 (Unaudited)  5

         Notes to Condensed Consolidated Financial Statements (Unaudited)     6

Item 2.  Management's Discussion and Analysis or Plan of Operation          7-8

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    9

Item 5.  Other Information                                                    9

Item 6.  Exhibits and reports on Form 8-K                                     9


SIGNATURES                                                                   10


<PAGE>









<PAGE>

                          PART I. Financial Information



Item 1.  Condensed Consolidated Financial Information.

         The condensed  consolidated  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 audited  financial  statements  and the notes  thereto
included  in the  registrant's  Annual  Report on Form 10-KSB for the year ended
March 31, 1997.

<PAGE>

MicroFrame, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
--------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
                                                                               June 30,      March 31,
                                ASSETS                                           1997           1997
                                                                             -----------    -----------
<S>                                                                          <C>            <C>        
Current assets
   Cash and cash equivalents                                                 $   588,815    $   539,214
   Accounts receivable, less allowance for doubtful
      accounts of $109,374 and $100,000                                        1,652,761      1,898,810
   Inventory, net                                                              1,038,992      1,030,343
   Deferred tax asset                                                            326,462        314,242
   Prepaid expenses and other current assets                                     118,051        120,990
                                                                             -----------    -----------
      Total current assets                                                     3,725,081      3,903,599

   Property and equipment at cost, net                                           336,259        343,123
   Capitalized software, less accumulated amortization
      of $857,257 and $812,257                                                   290,568        315,568
   Goodwill, less accumulated amortization of $19,065 and $16,230                 82,545         85,380
   Security deposits                                                              25,184         34,703
                                                                             -----------    -----------
      Total assets                                                           $ 4,459,637    $ 4,682,373
                                                                             ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Bank borrowings                                                           $    43,203    $    42,266
   Accounts payable                                                              391,783        361,537
   Accrued payroll and related liabilities                                       169,523        280,512
   Deferred income                                                               245,980        268,518
   Other current liabilities                                                     307,951        255,346
                                                                             -----------    -----------
      Total current liabilities                                                1,158,440      1,208,179
                                                                             -----------    -----------


Deferred tax liabilities                                                         165,076        173,077
Long-term debt                                                                    19,203         30,398

Committments and contingencies
Stockholders' equity
   Common stock - par value $.001 per share; authorized 50,000,000 shares,
      issued 4,839,203 shares and outstanding 4,838,803 shares at
      June 30, 1997; issued 4,839,203 shares and outstanding 4,838,803
      shares at March 31, 1997                                                     4,839          4,839
   Preferred stock - par value $10 per share;
      authorized 200,000 shares, none issued
   Additional paid-in capital                                                  6,212,828      6,212,828
   Accumulated deficit                                                        (3,096,749)    (2,942,948)
                                                                             -----------    -----------
                                                                               3,120,918      3,274,719
   Less - Treasury stock, 400 shares, at cost                                     (4,000)        (4,000)
                                                                             -----------    -----------
      Total stockholders' equity                                               3,116,918      3,270,719
                                                                             -----------    -----------

      Total liabilities and stockholders' equity                             $ 4,459,637    $ 4,682,373
                                                                             ===========    ===========
</TABLE>
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements


                                       3
<PAGE>

MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
--------------------------------------------------------------------------------
(unaudited)
                                                         Three Months Ended
                                                              June 30,
                                                         ------------------
                                                          1997           1996
                                                     -----------    -----------
Net sales                                            $ 1,736,546    $ 1,776,335

Cost of sales                                            741,046        605,059
                                                     -----------    -----------

Gross Margin                                             995,500      1,171,276

   Research and development expenses                     286,552        223,950
   Selling, general and administrative expenses          887,191        903,295
                                                     -----------    -----------

Income (loss) from operations                           (178,243)        44,031

Interest income                                            5,645         10,268
Interest expense                                          (1,424)       (14,199)
                                                     -----------    -----------

Income (loss) before income tax provision(benefit)      (174,022)        40,100
Income tax provision(benefit)                            (20,221)             0
                                                     -----------    -----------
Net income (loss)                                    $  (153,801)   $    40,100
                                                     ===========    ===========

Per share data
Primary
   Net income (loss) per share                       $     (0.03)   $      0.01
                                                     -----------    -----------

   Weighted average number of common shares
   outstanding                                               n/a    $ 4,883,704
                                                     -----------    -----------


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

                                       4

<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     June 30,
                                                                ------------------
                                                                1997           1996
                                                            -----------    -----------
<S>                                                         <C>            <C>        
Cash flows from operating activities
Net income (loss)                                           $  (153,801)   $    40,100
Adjustments to reconcile net income to net cash
  provided by operating activities
   Depreciation and amortization                                 94,738         84,671
   Provision for bad debts                                        9,374         17,686
   Provision for inventory obsolescence                          15,000         10,000
   Deferred tax provision                                       (20,221)             0
   (Increase) decrease in
      Accounts receivable                                       236,675        350,173
      Inventory                                                 (23,649)      (261,486)
      Prepaid expenses and other current assets                   2,939         28,601
      Security deposits                                           9,519             67
   Increase (decrease) in
      Accounts payable                                           30,246        117,310
      Accrued payroll and related liabilities                  (110,989)      (102,140)
      Deferred income                                           (22,538)       (13,529)
      Other current liabilities                                  52,605        (80,995)
                                                            -----------    -----------
      Net cash provided by operating activities                 119,898        190,458
                                                            -----------    -----------

Cash flows from investing activities
   Capital expenditures                                         (40,039)       (31,863)
   Capitalized software                                         (20,000)       (84,920)
                                                            -----------    -----------
      Net cash used in investing activities                     (60,039)      (116,783)
                                                            -----------    -----------

Cash flows from financing activities
   Repayments of debt                                           (10,258)      (209,403)
   Issuance of common stock                                           0      1,350,504
                                                            -----------    -----------
      Net cash provided by (used in) financing activities       (10,258)     1,141,101
                                                            -----------    -----------

Net increase in cash and cash equivalents                        49,601      1,214,776
Cash and cash equivalents - beginning of period                 539,214         48,302
                                                            -----------    -----------
Cash and cash equivalents - end of period                   $   588,815    $ 1,263,078
                                                            ===========    ===========
</TABLE>

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

                                       5
<PAGE>


                         MICROFRAME, INC. AND SUBSIDIARY
                         NOTES TO CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
                                  JUNE 30, 1997
                                   (Unaudited)



Note 1 - Condensed Consolidated Financial Statements:
-----------------------------------------------------

The  condensed  consolidated  balance  sheets as of June 30,  1997 and March 31,
1997,  the condensed  consolidated  statements of operations for the three month
periods ended June 30, 1997 and 1996 and the condensed  consolidated  statements
of cash flows for the three 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 for the fair presentation
of the Company's  financial  position,  results of operations  and cash flows at
June 30, 1997 and 1996 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 audited  financial  statements  and
notes  thereto  included  in the Annual  Report on Form 10KSB for the year ended
March 31, 1997.


Note 2 - Inventory:
-------------------

Inventory consists of the following:

                                                 June 30, 1997    March 31, 1997
                                                   -----------      -----------

Raw materials                                      $   537,231      $   625,583
Work in process                                        459,868          374,802
Finished goods                                          41,893           29,958
                                                   -----------      -----------
                                                     1,253,992        1,230,343
    Less, allowance for obsolescence                  (215,000)        (200,000)
                                                   -----------      -----------
         Total                                     $ 1,038,992      $ 1,030,343
                                                   ===========      ===========



Note 3 - Earnings 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 of outstanding stock options and warrants. Fully diluted
earnings per share also reflect additional dilution related to outstanding 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. Net loss per share is based on the number
of common shares outstanding at the end of the period.

                                       6

<PAGE>


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


         A number of  statements  contained  in this report are  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that involve  risks and  uncertainties  that could cause actual  results to
differ materially from those expressed or implied in the applicable  statements.
These  risks and  uncertainties  include,  but are not  limited  to,  the recent
introduction of, and the costs  associated with, a new product line;  dependence
on the acceptance of this new family of products; risks related to technological
factors;  potential manufacturing  difficulties;  dependence on third parties; a
limited customer base; and liability risks.


Results of Operations
---------------------


        Revenues for the quarter ended June 30, 1997 were $1,736,546 as compared
with revenues of $1,776,335 for the same quarter of the previous fiscal year, or
a decrease of  approximately  2 %.  Revenues were lower than expected due to the
last minute request by a major customer to delay a significant shipment until in
the late  second  quarter of this fiscal  year.  The  Company  continued  to see
acceptance of its new product,  the Sentinel 2000, as well interest in the other
member of the family of SNS products, the Manager 2000.


         The  Company's  cost of goods  sold  increased  from  $605,059  for the
quarter ended June 30, 1996 to $741,046 for the quarter ended June 30, 1997 as a
result of the continued  change in the product mix from mature  product lines to
the new family of products and a decrease in the amount of capitalized  software
costs.  Cost of goods sold as a percentage of sales increased from 34.1% for the
previous  comparable  fiscal period to 42.7% for this fiscal period,  due to the
factors  discussed above.  The Company  continues to focus on lowering the costs
related to the newer  products as they begin to mature and will  eventually  see
the benefits from manufacturing efficiencies.


         Research  and  development   expenses,   net  of  capitalized  software
development,  increased  from  $223,950  in the  quarter  ended June 30, 1996 to
$286,552 in the current  fiscal  quarter,  an increase of 28%.  This is a direct
reflection  of  the  Company's  continued  increased  activity  related  to  the
development of the Secure  Network  Systems/2000  set of products.  Research and
development  expenses as a percentage of revenues increased from 12.6% to 16.5%.
Selling,  general and administrative  expenses  decreased  approximately 2% from
$903,295  for the prior  year's  comparable  fiscal  period to $887,191  for the
fiscal period ended June 30, 1997.  This decrease  represents  lower general and
administrative costs offset by increases in the Company's selling expenses as we
embark on an aggressive  growth plan. The Company  anticipates  seeing increased
revenues as a result of these increased selling expenses in the third and fourth
quarters of this fiscal year.

         The Company had a loss from operations of $178,243 for the period ended
June 30, 1997, compared to income from operations of $44,031 for the same period
a year ago.  Due to the  reduction  in  interest  costs to the  Company  and the
effects of the income tax benefit of $20,221,  the net loss for the period ended
June 30,  1997 was  $153,801  compared  to net income of $40,100 for the quarter
ended  June 30,  1996.  At March 31,  1997 the  Company  had  provided a partial
valuation  allowance  against its existing deferred tax assets. At June 30, 1997
the Company has provided a full valuation allowance against any benefits arising
out of the net loss for the period.  The current expiration dates range from the
years 2001 through 2011.

                                       7
<PAGE>



Financial Condition and Capital Resources
-----------------------------------------

           During the first quarter of fiscal year 1998, the Company  recorded a
net loss of approximately $154,000.  Included in this loss were non-cash charges
of  approximately  $109,000 for  depreciation,  amortization  and provisions for
inventory allowance and bad debts. As a result, during the first three months of
fiscal year 1998, the Company's financial condition remained relatively stable.

           The  Company's  operations  provided  $120,000  of  cash,  due to the
collection of accounts receivable,  offset by the payment of accrued payroll and
related  liabilities.  The Company  utilized  approximately  $60,000 of cash for
capital and software-related  expenditures.  The Company utilized  approximately
$10,000 of cash to pay down its  long-term  debt in the first quarter as well as
approximately $55,000 to satisfy its New York State tax settlement.

           On August 30,  1996,  the Company  executed a credit  agreement  with
Farrington Bank of North Brunswick,  New Jersey (subsequently acquired by United
National Bank of Bridgewater,  New Jersey).  The agreement  provides the Company
with a $500,000 line of credit to finance future working  capital  requirements,
collateralized by accounts  receivable of the Company.  The agreement expires on
August 30, 1997.  No amount of this credit line had been utilized as of June 30,
1997.

           Based on its current cash and working  capital  position,  as well as
its available line of credit,  the Company believes that it will have sufficient
capital to meet its operational needs over the next twelve months.

           In fiscal 1998,  the Company is required  adopt the provisions of the
Financial  Accounting  Standards Board issued Statement of Financial  Accounting
Standards No. 128,  "Earnings  Per Share"  ("SFAS 128"),  which is effective for
financial statements for annual periods ending after December 15, 1997. SFAS 128
establishes   standards  for  the   computation,   presentation  and  disclosure
requirements  for  earnings  per share.  The  adoption  of this  standard is not
expected to have a material impact on the Company's earnings per share.

           In fiscal 1998, the Company is require to adopt the provisions of the
Financial  Accounting  Standards Board issued Statement of Financial  Accounting
Standards No. 131,  "Segment  Reporting"  ("SFAS  131"),  which is effective for
financial statements for annual periods ending after December 15, 1997. SFAS 131
establishes  standards  for the  disclosure  requirements  relative to operating
segments. The Company is currently evaluating the disclosure requirements of the
recently issued statement.

                                       8
<PAGE>


                           PART II. OTHER INFORMATION




Item 1.    Legal Proceedings
           -----------------

           In April 1997,  the Company  reached a  settlement  with the New York
           State Department of Taxation and Finance as it related to a sales tax
           assessment of $227,392 received in a notice of determination in March
           1996.  The  settlement  amount of  $55,513  was paid in full in April
           1997.

Item 5.    Other Information
           -----------------

           On July 1, 1997 the Company elected a new Director,  Mr. Alexander C.
           Stark Jr., to serve until the next annual meeting of  shareholders to
           be held on September 15, 1997.

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

                  (a)      Exhibits:        None.


                  (b)      Reports on Form 8-K:

                           On July 10,  1997  the  Company  filed  Form 8-K as a
                           result   of   the   resignation   and    simultaneous
                           replacement  effective  July 1, 1997 of the Company's
                           Chief  Financial  Officer  and the  election of a new
                           Director.



                                       9
<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:  August 13, 1997



                                    MICROFRAME, INC.


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


                                    /s/ John F. McTigue
                                    -----------------------------
                                    John F. McTigue, Chief Financial
                                    Officer  and Treasurer (Principal Financial
                                    Officer)