SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.  20549
 
                             FORM 10-KSB

               Annual Report Under Section 13 or 15(d) of
                  the Securities Exchange Act of 1934

For the fiscal year ended                               Commission file
December 31, 1997                                       number O-8482

                         ASTROCOM CORPORATION                          
            (Name of small business issuer in its charter)

      Minnesota                                         41-0946755             
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                      Identification No.)

  2700 Summer Street N.E., Minneapolis, Minnesota       55413-2820        
(Address of principal executive offices)                 (zip code)

Issuer's telephone number, including area code: (612) 378-7800

Securities registered pursuant to Section 12(g) of the Act:
         
         Shares of Common Stock, par value $.10 per share              
                           (Title of Class)

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, and (2) has been 
subject to such filing requirements for the past 90 days. 
        Yes   X        No      

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B 
is not contained herein, and will not be contained, to the best of registrant's 
knowledge, in definitive proxy or information statements incorporated by 
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. 
[X]

Issuer's revenues for its most recent fiscal year were $3,646,000.

As of March 13, 1998, the aggregate market value of the voting stock held by 
non-affiliates was $6,915,188, computed by reference to the average of the bid 
and asked prices on such date, as reported in the over-the-counter market.

As of March 13, 1998, there were outstanding 10,538,180 shares of the 
registrant's common stock, par value $.10 per share, and 200,000 shares
of the registrant's preferred stock, par value $1.00 per share.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the annual report to shareholders for the year ended
     December 31, 1997, are incorporated by reference into Part II.

     Portions of the proxy statement for the annual meeting of shareholders to 
     be held on May 28, 1998, are incorporated by reference into Part III.
     
<PAGE>
PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

     (a)  GENERAL.

     Astrocom Corporation ("Astrocom") was incorporated in the State of 

Minnesota on September 28, 1968. Astrocom has been engaged in the design, 

development, manufacture, assembly and sale of electronic products used for 

data communications since it commenced operations in 1968.
        
     (b)  BUSINESS OF REGISTRANT.
     
     ELECTRONIC PRODUCTS.  Registrant develops, manufactures, markets and 

services electronic devices which address key areas of wide area data, voice and

video communication networks.  Registrant's current products can be generally 

placed in the following product categories: T1 and Fractional T1 CSU/DSU's and 

Multiplexers, 56/64K Kbps DDS CSU/DSU's and Statistical Multiplexers.  These 

products contain all the features and functionality of industry standard 

counterparts combined with application specific added value features which 

address the requirements of the Internet, Video Conferencing and Corporate

Internetworking markets.  Advanced features of registrant's products help

organizations make better use of their bandwidth and reduce capital costs. 

Registrant's products are backed by 2-year, 5-year and lifetime warranties 
which include its signature Customer Service program which provides 7 days a 
week, 24 hours a day toll-free technical support and overnight replacement 
of failed units. 
     
     Registrant's customers include telephone companies, Internet Service 

Providers (ISPs), corporate and institutional end-users, integrators and 

distributors. Registrant is also an original equipment manufacturer (OEM) for 

a computer products catalog. Two purchasers of registrant's products each 

accounted for more than 10% of registrant's total net revenues during 1997.
     
     The sales activities for registrant's electronic products are carried on 

by a combination of manufacturers representative firms, system integrators,

value added resellers (VARs) and distributors.  In addition to channel sales, 

registrant's sales force pursues direct business with sizable service providers 

and end-user accounts.  Registrant provides marketing support through 

participation in selected industry trade shows, through a comprehensive 

corporate web site, through direct mail campaigns and through cooperative 

marketing activities with distributors. 

     MANUFACTURING.  In 1997, registrant subcontracted over 95% of its 

manufacturing operations to outside organizations specializing in 

manufacturing.  Registrant believes that there are several outside 

organizations who could provide the specialized manufacturing services required 

by registrant.   
     
     SOURCE AND AVAILABILITY OF MATERIALS.  The outside organizations with 

which registrant subcontracts to do its manufacturing purchase the necessary 

components and raw materials.  Registrant purchases a limited amount of 

components and raw materials from an assortment of suppliers, manufacturers 

and distributors throughout the United States.  Registrant believes that there 

are several sources of supply for the required components and raw materials.  
     
     PATENTS.  Registrant has no patents, exclusive licenses, franchises or 

concessions which are of material importance to its business.  Registrant has 

registered the trademark "WanMaster" with the United States Patent and 
Trademark Office and is in the process of registering additional trademarks.
     
     BACKLOGS AND TURN-OVER.  The backlog of unfilled orders for electronic 

products as of March 13, 1998, was approximately $109,000, as compared to 

approximately $160,000 on March 14, 1997. Registrant normally fills its 

orders for electronic products within ten days after receipt. Accordingly, the 

backlog figure is not indicative of future sales.  There is no significant 

seasonal aspect to the backlog for electronic products.
     
     GOVERNMENT SALES.  Registrant has for several years sold and leased 

electronic products to various United States government agencies. Revenues 

received from such sales and leases are currently nominal.  
     
     COMPETITION.  The business of registrant is highly competitive.  Price 

competition and service are the most significant features of the market in 

which registrant competes. Registrant competes on a nationwide basis with many 

other firms. Almost all of its competitors are larger and financially stronger 

than registrant. Management believes that registrant accounts for only a very 

small portion of the respective national and local markets.
     
     RESEARCH AND DEVELOPMENT.  Registrant spent $445,000 in 1996 and $560,000 

in 1997 for research and development. 
     
     Registrant deducts internal research and development costs as items of 

expense as they occur.   

     Registrant recognizes that the sale of electronic products will require 
     
continuous development of new products and refinement of established products.
     
     GOVERNMENT REGULATION.  Some of registrant's electronic products are used 

in conjunction with the telephone network.  Existing Federal Communications 

Commission (FCC) regulations and local tariffs allow such products to be 

interconnected with the telephone network. Certain of the products marketed by 

registrant have been registered with the FCC and management believes they meet 

all applicable FCC standards. Restrictive changes in interstate regulation (FCC 

jurisdiction) or intrastate tariffs (state regulatory agency jurisdiction) 

could limit the uses and hence the marketability of some of registrant's 

products.
     
     ENVIRONMENTAL ISSUES.  Management believes that compliance with federal, 

state and local provisions which have been enacted or adopted regulating the 

discharge of materials in the environment or otherwise relating to the 

protection of the environment should have no material effect upon the capital 

expenditures, earnings and competitive position of registrant's operations.
     
     EMPLOYEES.  As of March 13, 1998, registrant had a total of 14 employees.
     
No employees are currently represented by labor organizations and there 

are no collective bargaining agreements. Registrant provides paid holidays and 

vacations. In addition, registrant provides and partially funds group medical

and dental insurance.
   
     SALE OF SUBSIDIARY AND LEASE SETTLEMENT COSTS.  On May 29, 1990, a

wholly-owned subsidiary of registrant sold its business and substantially all

its assets to Visi-Tour Vision, Inc. (subsequently renamed Circuit Board One, 

Inc.). As a result of that transaction, all of the subsidiary's right, title 

and interest in a real estate lease and various equipment leases were assigned 

to Circuit Board One, Inc., but registrant remained contingently liable to the 

respective lessors in the event of default by Circuit Board One, Inc. Circuit 

Board One, Inc. ceased operations on October 8, 1992.  
     
     The real estate lease assigned to Circuit Board One, Inc. covered a 29,867 

square foot office, manufacturing and warehouse facility at 4300 Peavey Road, 

Chaska, Minnesota. Registrant's guaranty of the lease remained in effect after 

the assignment to Circuit Board One, Inc.  After Circuit Board One, Inc. ceased 

operations, the landlord asserted a claim against registrant. This matter was 

settled during 1993, and the landlord and the registrant agreed upon a 
settlement payment schedule. Registrant continues to make payments pursuant 
to such payment schedule.  See Notes to Financial Statements.  
     
     TRANSACTIONS WITH HANROW FINANCIAL GROUP, LTD., HANROW CAPITAL FUND 
FIVE AND HANROW CAPITAL FUND X  

     A.  Hanrow Financial Group, Ltd./Hanrow Capital Fund Five.   On March 15, 

1991, registrant delivered to Hanrow Capital Fund Five, a Minnesota limited 

partnership, a certificate for 654,545 shares of common stock in exchange for 

payment of 360,000. On April 5, 1991, in exchange for payment of an additional 

$360,000, registrant delivered to Hanrow Capital Fund Five a five year 

Subordinated Note bearing interest at 16% per annum and secured by a second 

security position in all assets of registrant, and a Warrant enabling Hanrow 

Financial Group, Ltd. to purchase 180,000 shares of the common stock 

of registrant at $1.00 per share. 
     
     On April 5, 1992, the Subordinated Note was reduced by $60,000 in exchange 

for 200,000 shares of common stock. Registrant also issued a Warrant enabling 

Hanrow Capital Fund Five to purchase 50,000 shares of the common stock of 

registrant at $.35 per share for a period of five years and the interest rate 

on the remaining $300,000 subordinated debt balance was reduced to 13%.  On 

March 31, 1997, Hanrow Capital Fund Five exercised its Warrant and purchased 

50,000 shares of the common stock of registrant.  
     
     On June 3, 1993, registrant borrowed $33,000 from Hanrow Capital Fund 

Five. On June 30, 1993, Hanrow Capital Fund Five received 110,000 shares of 

the common stock of registrant at $.30 per share in exchange for conversion of 

the $33,000 loan. At that time, Hanrow Capital Fund Five also received an 

additional 365,833 shares of the common stock of registrant at $.30 per share 

in exchange for a $100,000 reduction in the Subordinated Note and conversion 

of the interest payment in the amount of $9,750 to be owing to it by 

registrant as of July 1, 1993.
     
     On June 16, 1993, registrant issued a Warrant enabling Hanrow Financial 

Group, Ltd. to purchase 50,000 shares of the common stock of registrant at $.30 

per share for a period of five years. Registrant delivered the Warrant in 

consideration of financial and management advisory services provided to 

registrant by Hanrow Financial Group, Ltd.
     
     On June 30, 1994, Hanrow Capital Fund Five received 13,000 shares of the 

common stock of registrant at $.50 per share in payment of the interest in the 

amount of $6,500 to be owing to it by registrant as of July 1, 1994.
     
     On April 5, 1996, Hanrow Fund Five converted the remaining $200,000 

principal amount of the Subordinated Note into 200,000 shares of Convertible 

Preferred Stock, $1.00 par value.  The Preferred Stock is convertible into 

shares of the common stock of registrant at $.46 per common share.  The 

Preferred Stock is callable by registrant at $2.00 per share on April 5, 

2000. 

     B.  Hanrow Capital Fund X.  In August and September 1994, registrant 

borrowed an additional $65,785 from Hanrow Capital Fund X.  On December 22, 

1994, registrant issued a Convertible Debenture covering the loaned amount.  

On December 22, 1994, registrant also issued a Warrant enabling Hanrow 

Capital Fund X to purchase 131,570 shares of the common stock of registrant 

at $.50 per share from December 22, 1994 through December 31, 1999.  

     On March 15, 1995, registrant borrowed an additional $35,000 from Hanrow 

Capital Fund X.  A Convertible Debenture covering the additional loaned 

amount, and containing the same terms and conditions as the December 22, 1994 

Convertible Debenture, was issued by registrant.  Registrant also issued a 

Warrant enabling Hanrow Capital Fund X to purchase 70,000 shares of the common 

stock of registrant at $.50 per share from March 15, 1995 through December 31, 

1999.
     
     On June 30, 1996, Hanrow Capital Fund X exchanged its two Convertible 

Debentures for a new Note bearing interest at 10%.  This Note was paid in full 

by registrant in September 1996.

     C.  Covenants.  A March 15, 1991 Agreement and related Security Agreement 

entered into between registrant and Hanrow Financial Group, Ltd. ("Investor") 

contained various covenants relating to registrant's operations and financial 

condition. From time to time in 1992, 1993, 1994 and 1995, registrant was in 

violation of several of these covenants. Investor waived registrant's breach of 

certain covenants for the periods ending December 31, 1991, 1992, 1993, 1994 and

1995.  No waiver letter was requested for the periods ending December 31, 1996 

or December 31, 1997.   
     
     D.  Hanrow Business Finance Corp.  In consideration of a $50,000 loan made 

to registrant on May 10, 1996, and an additional $25,000 loan made to 

registrant on June 5, 1996, Hanrow Business Finance received warrants to 

purchase an aggregate 75,000 shares of the common stock of registrant at 

$1.50 per share.  The warrants were issued on August 1, 1996, and September 

1, 1996, the respective dates on which the loans were repaid.

     PRIVATE PLACEMENT.  On August 28, 1997, and September 17, 1997, registrant 

accepted subscription agreements covering an aggregate $510,000 loaned to 

registrant by 17 accredited investors, and authorized the issuance of 

Subordinated Convertible Promissory Notes and five-year Warrants to such 

investors.  The Notes bear interest at 12% per annum and mature on July 31, 

1998.  The Warrants provide for the issuance of an aggregate 765,000 shares  

of common stock, at $.50 per share.   

ITEM 2.   DESCRIPTION OF PROPERTY.
     
     ST. PAUL PROPERTIES.  On June 1, 1992, registrant sold and assigned to 

The Crepeau Company ("Crepeau") all rights, duties and liabilities registrant 

had under a lease from the Port Authority which covered approximately 33,600 

square feet of office and manufacturing space and 165,258 square feet of land 

at 120 West Plato Boulevard, St. Paul, Minnesota, in the St. Paul Port 

Authority's Riverview Industrial Area West. The lease from the Port Authority 

runs through August 31, 2007.  Registrant remains contingently liable to the 

Port Authority in the event that Crepeau defaults under the terms of the 

lease.  
     
     Registrant leases from the St. Paul Port Authority 81,568 square feet of 

undeveloped land. The lease runs through August 31, 2007 and provides for 

rental payments of $626 per month. On August 16, 1993, registrant subleased 

said undeveloped land to Rutzick-Sheehy Office Center, a Minnesota general 

partnership. The sublease runs through August 31, 2007, and provides for 

payments of $626 per month during the entire term of the sublease.  Subtenant

also agreed to pay all taxes, special assessments and other charges and expenses

required to be paid by registrant pursuant to its lease with the Port Authority.
     
     On March 5, l993, registrant entered into a Lease Agreement with Summer 

Business Center Partnership ("Summer") pursuant to which registrant leases 

approximately 17,524 square feet of square feet of office and manufacturing 

space at 2700 Summer Street NE, Minneapolis, Minnesota.  The lease runs from 

April 9, l993, through March 31, l999, and provides for escalating monthly 

rental payments over the term of the lease, with registrant to pay all taxes 

and insurance and utility, maintenance and other costs. 
     
     On February 21, 1995, registrant and Summer entered into an Amendment to 

Lease providing that effective March 1, 1995, the leased premises would be 

reduced by 2,262 square feet and redefined to be 15,262 square feet of office 

and manufacturing space.  The Amendment provides for rental payments of 

$6,995.08 per month for the months of April 1996 through March 1999.

ITEM 3.   LEGAL PROCEEDINGS.

     On July 27, 1983, the Board of the Minnesota Pollution Control Agency 

found registrant and 13 other corporations to be responsible persons under the 

Minnesota Superfund Act and thereby secondarily liable for the cleanup of 

hazardous wastes given to Ecolotech and Brian Carriere. Ecolotech collected 

such waste materials from registrant during the period 1973 to 1978. On 

January 25, 1984, registrant and the 13 other corporations entered into an 

agreement to share the costs of cleanup and litigation in proportion to the

respective volumes of waste materials given by each to Ecolotech. As of 

March 13, 1998, registrant had paid approximately $171,000 pursuant to the 

agreement, none of which was paid during 1997. The cleanup was completed on 

February 1, 1986. During February, 1987, a judgment was obtained in favor of 

registrant and the 13 other corporations against Carriere Properties and 

others. No estimate can be given as to the collectibility of said judgment. 

Registrant believes that any costs or liabilities that it may incur in 

connection with any latent problems will not have a material effect on the 

financial condition of registrant.
     
     In June 1988, registrant was informed by Mibco, the owner and lessor of 
     
the Minnetonka facility where registrant's wholly-owned subsidiary was located 

until March 6, 1989, that there were soil and groundwater contamination 

problems at the facility. There currently appear to be seven companies 

(including Mibco) which are potentially responsible parties. Registrant's 

alleged involvement occurred during the period March 1972 through September 

1973. The matter has been reported to the Minnesota Pollution Control Agency 

(MPCA) which has made a preliminary assessment, conducted a followup site 

investigation and included the site on Minnesota's permanent list of 

priorities.  Registrant will continue to monitor the site testing required by 

the MPCA.  Registrant believes that any costs or liabilities that it may 

incur in connection with the proceedings before the MPCA or any lawsuit 

commenced by MPCA or the present owner will not have a material effect on the 

financial condition of registrant.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
     
     None.

PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The information regarding Market and Dividend Data included in

registrant's annual report to shareholders for the year ended December 31, 

1997, is incorporated herein by reference.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS.
     
     Management's Discussion and Analysis of Financial Condition and Results 

of Operations included in registrant's annual report to shareholders for the 

year ended December 31, 1997, are incorporated herein by reference.

ITEM 7.   FINANCIAL STATEMENTS.

     The financial statements included in registrant's annual report to 
     
shareholders for the year ended December 31, 1997, are incorporated herein by 

reference.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE.

     No disagreements with accountants have occurred within the two-year period 

ended December 31, 1997, which required reporting on Form 8-K.

PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
     
     The information required by Item 9 is incorporated herein by reference 

to the proxy statement to be filed within 120 days after year end.

ITEM 10.   EXECUTIVE COMPENSATION.

     The information required by Item 10 is incorporated herein by reference 

to the proxy statement to be filed within 120 days after year end.

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by Item 11 is incorporated herein by reference to 
     
the proxy statement to be filed within 120 days after year end.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by Item 12 is incorporated herein by reference 

to the proxy statement to be filed within 120 days after year end.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.
     
     (a)  Listing of Exhibits:

          3(i)      Restated Articles of Incorporation of registrant 
                    [incorporated by reference to Exhibit 19 to Form 10-Q for 
                    the quarter ended June 30, 1984 (File No.0-8482)].

          3(ii)     Restated Bylaws of registrant [incorporated by reference 
                    to Exhibit 3(ii) to Form 10-K for the year ended 
                    December 31, 1984 (File No. 0-8482)].
                    
          3(iii)    Amendment to Restated Bylaws of registrant adopted by the 
                    directors on June 25, 1985 [incorporated by reference to 
                    Exhibit 3(iii) to Form 10-K for the year ended December 31, 
                    1986 (File No. 0-8482)].

          3(iv)     Amendment to Restated Articles of Incorporation of 
                    registrant approved by shareholders at May 20, 1987 meeting 
                    [incorporated by reference to Exhibit 3(iv) to Form 10-K 
                    for the year ended December 31, 1987 (File No. 0-8482)].

          3(v)      Amendment to Restated Bylaws of registrant adopted by the 
                    directors on February 21, 1988 [incorporated by reference 
                    to Exhibit 3(iv) to Form 10-K for the year ended 
                    December 31, 1988 (File 0-8482)].

          3(vi)     Amendment to Restated Bylaws of registrant adopted by the 
                    directors on July 31, 1989 [incorporated by reference to 
                    Exhibit 3(vi) to Form 10-K for the year ended December 31, 
                    1989 (File 0-8482)].

          3(vii)  Amendment to Restated Articles of Incorporation of
                    registrant approved by shareholders at December 20, 1996
                    meeting [incorporated by reference to Exhibit 3(vii)
                 to Form 10-KSB for the year ended December 31, 1996
                 (File 0-8482)].

          10(i)     1988 Stock Option Plan of registrant as approved by 
                    shareholders at May 25, 1988 meeting [incorporated by 
                    reference to Exhibit 10(iv) to Form 10-K for the year ended 
                    December 31, 1988 (File No. 0-8482)].

          10(ii)    Amendment to 1988 Stock Option Plan of registrant adopted 
                    by the directors on October 17, 1988 [incorporated by 
                    reference to Exhibit 10(v) to Form 10-K for the year ended 
                    December 31, 1989 (File No. 0-8482)].

          10(iii)   Amendment to 1988 Stock Option Plan of registrant adopted 
                    by the directors on January 25, 1996 and approved by the   
                    shareholders on May 23, 1996 [incorporated by reference to 
                    Exhibit 10(iii) to Form 10-KSB Report for the year ended   
                    December 31, 1996 (File No. O-8482)]. 
                    
          10(iv)    Lease Agreement between registrant and Port Authority of 
                    the City of St. Paul, dated September 1, 1977 
                    [incorporated by reference to Exhibit 1 to Form 8-K Report 
                    for September 27, 1977 (File No. 0-8482)].

          10(v)     Asset Sale Agreement between registrant's subsidiary, 
                    Circuit Board One, Inc. and Visi-Tour Vision, Inc., dated 
                    March 16, 1990 [incorporated by reference to Exhibit 
                    10(viii) to Form 10-K Report for the year ended 
                    December 31, 1989 (File No. 0-8482)].

          10(vi)    Agreement for Assignment and Assumption of Lease between 
                    registrant and the Crepeau Company, dated January 16, 1992 
                    [incorporated by reference to Exhibit 10(xi) to Form 10-K 
                    Report for the year ended December 31, 1991 (File 0-8482)].

          10(vii)   Purchase Agreement between registrant and Hanrow Financial 
                    Group, Ltd., dated March 15, 1991 [incorporated by 
                    reference to Exhibit 10(x) to Form 10-K Report for the 
                    year ended December 31, 1990 (File 0-8482)].

          10(viii)  Subordinated Promissory Note, Security Agreement and 
                    Warrant, dated April 5, 1991, delivered to Hanrow Financial 
                    Group, Ltd. [incorporated by reference to Exhibit 10(xiii) 
                    to Form 10-K Report for the year ended December 31, 1991 
                    (File 0-8482)].

          10(ix)    First Amendment to Purchase Agreement, Subordinated 
                    Promissory Note and Security Agreement [incorporated by 
                    reference to Exhibit 10(xv) to Form 10-K Report for the 
                    year ended December 31, 1991 (File 0-8482)].

          10(x)     Lease Agreement between registrant and Summer Business 
                    Center Partnership, dated March 5, 1993 [incorporated by 
                    reference to Exhibit 10(xvi) to Form 10-KSB Report for the 
                    year ended December 31, 1992 (File O-8482)].

          10(xi)    Sublease Agreement between registrant and Rutzick-Sheehy 
                    Office Center, dated August 16, 1993 [incorporated by 
                    reference to Exhibit 10(xiv) to Form 10-KSB Report for the 
                    year ended December 31, 1993 (File O-8482)].

          10(xii)   Amendment to Lease between registrant and Summer Business 
                    Center Partnership, dated February 21, 1995 [incorporated 
                    by reference to Exhibit 10(xxi) to Form 10-KSB Report for 
                    the year ended December 31, 1994 (File O-8482)].

         10(xiii)  Subordinated Convertible Promissory Note and Warrant, dated
                 8/28/97 or September 17, 1997

         10(xiv)  Combined Account Factoring and Security Agreement between
                 registrant and Principal Resources, LLC, dated October 13,
                 1997 

         10(xv)  Warrant issued to Ronald B. Thomas, dated July 2, 1997.
  
          13        Registrant's 1997 Annual Report to Shareholders.

          23        Consent of Independent Auditors.

     (b)  Reports on Form 8-K filed in the fourth quarter of 1997:

          None.

<PAGE>
SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant 
has duly caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.

                              ASTROCOM CORPORATION


                              By: s/ Ronald B. Thomas         
                                  Ronald B. Thomas, President      
                                  
Dated: March 26, 1998.

                              By: s/ Ronald B. Thomas 
                                  Ronald B. Thomas, Principal
                                  Financial Officer and Principal
                                  Accounting Officer


     In accordance with the Exchange Act, this report has been signed below by 
the following persons, constituting a majority of the Board of Directors, on 
behalf of the registrant and in the capacities and on the dates indicated.

                                        Date

s/ S. Albert D. Hanser                  March 26, 1998
S. Albert D. Hanser, Director

s/ Dennis E. Evans                      March 26, 1998
Dennis E. Evans, Director

s/ Roger V. Stageberg                   March 26, 1998
Roger V. Stageberg, Director

s/ Douglas M. Pihl                      March 26, 1998
Douglas M. Pihl, Director

s/ Ronald B. Thomas               March 26, 1998
Ronald B. Thomas, Director
<PAGE>
Exhibit 10(xiii)    Subordinated Convertible Promissory Note and Warrant, dated
                 8/28/97 or September 17, 1997

Exhibit 10(xiv)  Combined Account Factoring and Security Agreement between
                 registrant and Principal Resources, LLC, dated October 13,
                 1997 

Exhibit 10(xv)   Warrant issued to Ronald B. Thomas, dated July 2, 1997

Exhibit 13          Registrant's 1997 Annual Report to Shareholders

Exhibit 23          Consent of Independent Public Accountants                  
       
<PAGE>
                        Exhibit 10(xiii)

            SUBORDINATED CONVERTIBLE PROMISSORY NOTE
                           AND WARRANT

            SUBORDINATED CONVERTIBLE PROMISSORY NOTE

                                           Minneapolis, Minnesota
                                                  _________, 1997

     FOR VALUE RECEIVED, Astrocom Corporation (the "Company") promises to pay
to the order of ______________________________ or any permitted successor or
assign (the "Lender"), at ____________________________________ or any other 
place subsequently designated by the holder hereof, in lawful money of the 
United States of America, the principal sum of ________________________________
Dollars, or so much thereof as may have been advanced to or for the benefit of
the undersigned and remains unpaid from time to time, together with interest
thereon (calculated on the basis of actual days elapsed in a 365-day year) at an
annual rate of twelve (12%) percent.

     Maturity Date.  If not sooner paid in accordance with the terms hereof, the
principal balance hereunder, together with all unpaid interest accrued thereon,
shall be due and payable, in full, on July 31, 1998 (hereinafter called 
"Maturity Date").

     Conversion.  The Lender has the right, at any time prior to the payment in
full of this Note, to convert the principal amount of this Note and accrued
interest into common stock of the Company, as such shares shall be constituted
at the date of conversion, at a conversion price per share equal to 80% of the
average of the bid and asked prices for one share of common stock at the close
of business on the day preceding the date of conversion.

     Conversion of this Note shall be made by surrender hereof by the Lender to
the Company at its principal office with a request for conversion of a 
designated amount, and such conversion shall be deemed to have been effected 
upon such surrender.  The Company shall thereafter promptly issue certificates 
for the number of shares of common stock into which such amount of this Note 
shall have been converted.  The Lender shall be deemed to be the record owner of
such shares as of the close of business on the date of such conversion.  The 
Lender shall not be entitled to receive a fractional share of common stock, 
but in lieu thereof the Company shall pay in cash an amount equal to the value 
of such fractional share on the date of such conversion.  The Company shall 
thereupon cancel this Note, and, in the event that less than the entire amount 
hereof is so converted, shall issue a new Note for the balance not so 
converted.

     Transferability.  This Note, and the shares of common stock issuable upon
conversion hereof, may not be sold, transferred, assigned or hypothecated unless
(i) a registration statement under the Securities Act of 1933, as amended,
relating thereto is in effect and this Note or the shares of common stock are
sold in accordance with such registration, (ii) such transfer is exempt from the
registration requirements of such Act and an opinion of counsel satisfactory to
the Company to such effect is obtained, (iii) a "no action letter" has been
received from the Securities and Exchange Commission (the "Commission") to the
effect that the distribution of this Note or the shares of common stock without
registration will not result in a recommendation by the staff of the Commission
that such Act has been violated, or (iv) by will or pursuant to the laws of
descent and distribution.  If this Note, or the shares of common stock issuable
upon conversion hereof, are transferred, any assignee or transferee of this Note
or the shares of common stock, by acceptance thereof, represents and warrants
that the acquisition of this Note or the shares of common stock is for 
investment and without any view to the distribution thereof and that, except 
with respect to any permitted assignment, such assignee has no intention of 
selling or otherwise transferring this Note or the shares of common stock.

     Restrictions on Conversion and Transferability.  The holder of this Note,
by acceptance hereof, agrees to give written notice to the Company before
conversion of this Note or assigning or transferring this Note, or assigning or
transferring any shares of common stock issued upon the conversion hereof, of
such holder's intention to do so, describing briefly the timing of any proposed
conversion and the manner of any proposed assignment or transfer.  If, in the
opinion of counsel to the Company, the proposed conversion, assignment or
transfer may be effected without registration or qualification under federal or
state law, the Company shall notify such holder, whereupon such holder shall be
entitled to convert this Note or assign or transfer this Note or the shares of
common stock, all in accordance with the terms of the notice delivered by such
holder to the Company.  If, in the opinion of such counsel, the proposed
conversion or assignment or transfer described in the written notice given
pursuant to this paragraph may not be effected without registration or
qualification of this  Note or the shares of common stock issued on conversion
thereof, the Company shall promptly give written notice to such effect to the
holder thereof and the Company shall have no obligation to complete such
conversion or assignment or transfer.

     Acceleration of Maturity.  Upon the occurrence of any of the following
events the Lender may, at its option, demand immediate repayment in full of the
indebtedness evidenced by this Note:

          (1)  The Company shall fail to make any payment when due hereunder
     and said failure shall continue for ten days after Lender gives written
     notice thereof to the undersigned.

          (2)  The default by the Company on its payment obligations under
     any agreement under which the Company is indebted (notice of which will be
     promptly given to the Lender).

          (3)  The Company makes an assignment for the benefit of creditors,
     or the Company applies for or consents to the appointment of a trustee or
     receiver for the Company.

          (4)  A trustee or receiver is appointed for the Company or for the
     major part of its property and the order of such appointment is not
     discharged, vacated or stayed within 90 days after such appointment.

          (5)  Bankruptcy, reorganization, arrangement, insolvency or
     liquidation proceedings, or other proceedings for relief under any
     bankruptcy or similar law or laws for the relief of debtors, are
     instituted by or against the Company and, if instituted against the
     Company are consented to or, if contested by the Company, are not
     dismissed by the adverse parties or by an order, decree or judgment within
     90 days after such institution.

     Payments.  Interest shall be accrued commencing on the date hereof and
continuing thereafter until the Maturity Date, on which date the entire unpaid
principal balance and unpaid accrued interest shall be due and payable in full.

     Prepayment.  The Company may prepay this Note at any time without penalty.

     Subordination.  This Note is subordinate in right only to claims of Senior
Lenders.  For purposes of this Note, "Senior Lenders" shall mean the holders of
security interests presently effective against the assets of the Company, but
excluding, specifically, Hanrow Capital Fund Five, a Minnesota limited
partnership, Hanrow Financial Group, Ltd. and the successors and assigns of each
of them.

     Waiver of Notices; Collection Costs.  Except as provided in the paragraph
of this Note entitled "Acceleration of Maturity", the Company waives demand,
presentment for payment, notice of dishonor, protest and notice of protest and,
in the event of default hereunder, the Company agrees to pay, on demand, all
costs of collection, including reasonable attorneys' fees.

     Amendment.  No amendment, modification or waiver of any provision of this
Note shall be effective unless the same shall be in writing and signed by the
Company and the holder hereof.

     No Waiver.  Failure or delay of the Lender to enforce any provision of this
Note shall not be deemed a waiver of any such provision, and the Lender shall 
not be prevented from enforcing any such provision at a later time.  Any waiver 
by the Lender of any provision hereof must be expressed and must be in a writing
signed by the Lender.  Any such waiver shall be effective only in a specific
instance and for the specific purpose for which it was given.

     Cumulative Remedies.  The remedies provided in this Note are cumulative and
not exclusive of any remedies provided by law.

     Governing Law; Severability.  The terms of this Note shall be governed by
and construed in accordance with the laws of the State of Minnesota.  Any term
hereof which is deemed unenforceable shall not affect the enforceability of any
other term hereof.

                                   ASTROCOM CORPORATION


                                   By      /s/ Ronald B. Thomas   
                                   Its President
                                   2700 Summer Street N.E.
                                   Minneapolis, MN 55413-2820


     THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED
     UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
     STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
     OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS
     AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS
     COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF
     COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER,
     ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT
     FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
     ACT AND SUCH LAWS.  
<PAGE>
              WARRANT FOR PURCHASE OF COMMON STOCK
                               OF
                      ASTROCOM CORPORATION
                    (A Minnesota Corporation)

                          ______ shares


     This certifies that _______________________________________________________
(hereinafter the "holder"), is entitled to purchase from Astrocom Corporation
(hereinafter the "Company") ______ fully paid and nonassessable shares of Common
Stock of the Company, par value $.10 per share, pursuant to the terms and
conditions hereinafter set forth, at the price of $.50 per share.

     1.   The rights represented by this Warrant may be exercised at any time
from the date hereof through July 31, 2002 by the holder hereof, in whole or in
part (but not as to a fractional share of Common Stock), by the surrender of 
this Warrant at the principal office of the Company and upon payment to the 
Company by certified check or bank draft of the purchase price for such shares 
as set forth above.  The holder shall also execute and deliver such agreements 
and representations concerning the holder's intention not to distribute the 
Common Stock so obtained and such other matters as the Company may reasonably 
request in order to permit issuance of the shares of Common Stock pursuant to 
exemptions from registration under federal and state laws, provided, however, 
that the unavailability of any such exemption shall not affect the Company's 
obligation to issue shares of its Common Stock pursuant hereto.  Upon any 
exercise of the rights represented by this Warrant, certificates for the shares
of stock so purchased shall be delivered to the holder hereof within a 
reasonable time, not exceeding fifteen (15) days, and, unless this Warrant has 
expired, a new Warrant representing the number of shares, if any, with respect 
to which this Warrant shall not then have been exercised shall also be issued 
to the holder hereof within such time.

     2.   The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be fully paid and nonassessable and free from all taxes, liens, and charges with
respect to the issuance thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issuance upon the exercise of the subscription rights evidenced by
this Warrant, a sufficient number of shares of its Common Stock to provide for
the exercise of the rights represented by this Warrant.

     3.   In the event that the Company shall, at any time prior to the
expiration date of this Warrant and prior to the exercise hereof: (a) declare or
pay to the holders of the Common Stock a dividend payable in any kind of shares
of stock of the Company; or (b) 

THIS WARRANT IS SUBJECT TO THE TERMS OF THE LEGEND SET FORTH ON THE LAST PAGE
HEREOF.

change or divide or otherwise reclassify its Common Stock into the same or a
different number of shares with or without par value, or into shares of any 
class or classes; or (c) consolidate or merge with, or transfer its property as 
an entirety or substantially as an entirety to, any other corporation; then, 
upon the subsequent exercise of this Warrant, the holder hereof shall receive 
for the exercise, such additional shares of stock of the Company, or such 
reclassified shares of stock of the Company, or such shares or securities of the
Company or any other entity resulting from the occurrence of any such event 
which he would have been entitled to receive had he exercised this Warrant prior
to the happening of any of the foregoing events.

     4.   The certificates representing the shares to be issued upon exercise
of the rights represented by this Warrant which have not been registered under
applicable federal and state laws will bear a legend substantially as follows:

     "The securities represented by this certificate have not been
     registered under the Securities Act of 1933 or the securities act of
     any state.  The securities have been acquired for investment and may
     not be sold, transferred for value, pledged, hypothecated or
     otherwise encumbered unless (1) pursuant to an effective
     registration of them under the Securities Act of 1933 and the
     applicable securities act of any state, or (2) there is presented to
     the corporation an opinion of counsel acceptable to counsel for the
     corporation to the effect that such registration is not required."

By exercise of this Warrant the holder agrees to be bound by the terms of such
legend.

     5.   This Warrant shall not entitle the holder hereof to any voting rights
or other rights as a stockholder of the Company.

     6.   This Warrant shall not be transferable by the holder, other than
pursuant to registration under federal and state securities laws or an exemption
from such registration, the availability of which shall be reasonably determined
by the Company, and then only: (a) to members of the immediate family of the
holder or trusts for the benefit of the immediate family of the holder; (b) as
provided in paragraph 7 below; or (c) if the holder is a corporation, 
partnership or other business entity, to the owners or affiliates thereof.

     7.   In the event of the death of the holder prior to the expiration date
of this Warrant, and prior to its exercise, this Warrant shall be exercisable
until the expiration date of this Warrant, but only by the executors or
administrators of the estate of the holder or by the persons to whom the 
holder's rights shall pass by the holder's Will, or the laws of descent and 
distribution.

     8.   This Warrant is being executed and delivered in the State of
Minnesota, and this Warrant shall be construed in accordance with the laws of
such State.

     9.   This Warrant shall expire and be void unless exercised on or before
July 31, 2002.

     WITNESS the signature of the Company's duly authorized officer as of the
____ day of ______, 1997.


                         ASTROCOM CORPORATION


                         By      /s/ Ronald B. Thomas     
                              Its President


THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 ("THE ACT") OR UNDER APPLICABLE STATE LAWS.  THE WARRANT
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED EXCEPT AS PROVIDED ABOVE
AND NO TRANSFER OF IT WILL BE MADE BY THE CORPORATION OR ITS TRANSFER AGENT IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE WARRANT UNDER THE
ACT, AS AMENDED, A "NO ACTION" LETTER OF THE SECURITIES AND EXCHANGE COMMISSION,
OR AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED. FURTHERMORE THE WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED EXCEPT AS PROVIDED ABOVE AND NO TRANSFER OF IT WILL BE MADE BY THE
CORPORATION OR ITS TRANSFER AGENT IN THE ABSENCE OF AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION THAT SUCH TRANSFER DOES NOT REQUIRE COMPLIANCE 
WITH APPLICABLE STATE LAW OR THAT SUCH COMPLIANCE HAS BEEN EFFECTED.<PAGE>
      
       Exhibit 10(xiv)

                        COMBINED ACCOUNT FACTORING AND SECURITY
        AGREEMENT WITH PRINCIPAL FINANCIAL RESOURCES, LLC

        COMBINED ACCOUNT FACTORING AND SECURITY AGREEMENT

This Agreement entered into as of October 3, 1997, by and among Astrocom
Corporation (herein called "Client"), a Minnesota corporation, whose address is
2700 Summer Street NE, Minneapolis, Minnesota 55413-2820, and Principal
Resources, LLC (herein called "Factor"), a Minnesota corporation, whose address
is 5217 Wayzata Boulevard, Suite 120, Minneapolis, MN 55416.  In consideration
of the mutual covenants set forth herein, Client and Factor agree as follows:

                               I.  DEFINITIONS

"Account" means the right to payment for goods sold or leased, and delivered, or
services rendered, which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance, but does not include any
Account arising out of sales or leases to any subsidiary, parent or affiliated
entity of Client.

"Affiliate" means, with respect to the Client, any person which directly or
indirectly controls, is controlled by, or is under common control with the
Client.  The Client shall be deemed to control another person if the Client owns
directly or indirectly 5% or more of any class of voting stock of the controlled
person or possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the controlled person, whether
through ownership of stock by contract or otherwise.  In addition, the Client's
Affiliates shall include the Client's officer, directors, joint venturers and
partners and any person controlled by any such officer, director, joint venturer
partner.

"Collateral" means all of the property, real or personal, tangible or 
intangible, given as security pursuant to Section 7.01 hereof for the 
obligations of Client under this agreement.

"Credit Problem" means a Customer is unable to pay its debts because of
insolvency, the dissolution, termination of existence, or business failure of 
the Customer, the voluntary filing of a petition of bankruptcy, or the 
commencement of any proceeding under the Bankruptcy Code or any other bankruptcy
or insolvency laws by or against Customer such that payment on the Account is or
will be impaired.

"Customer" means Client's customer or the account debtor.

"Customer Dispute" means any claim by a Customer against Client, valid or
invalid, now existing or hereafter arising (including but not limited to a claim
for credit or refund due to a return of goods which gave rise to an Account),
that may reduce the amount collectible from Customer by Factor.  The foregoing
notwithstanding, a dispute with a Customer involving both a Customer Dispute and
a Credit Problem shall be deemed a Customer Dispute.

"Daily Rate" means the amount per diem equal to 2.5% over the Reference Rate per
annum times the Part Payment, as set forth in Section 2.06 below, for each day
an Account assigned herein remains unpaid.

"Eligible Amount" means the difference between the gross amount of the Account
and any partial payments under the Account if less than the gross face amount,
and any trade or cash discounts, credits or allowances, or any adjustments to 
the Account taken by the Customer.

"Insolvent" means, with respect to any person or entity, that such person's or
entity's liabilities exceed such person's or entity's assets and/or such person
or entity is not generally paying its debts as they become due.

"Reference Rate" means the rate of interest from time to time publicly announced
by First Bank National Association as its "Reference Rate" or "Base Rate".

              II.  PURCHASE OF ACCOUNTS RECEIVABLE

2.01 Assignment/Purchase.  Client hereby assigns to Factor as absolute owner
with recourse all Accounts approved and deemed acceptable by Factor, now or
hereafter created by Client's credit sales to Customers, and represented by
Client to be bona fide existing obligations of its Customers arising out of, and
acquired by it, in the ordinary course of its business, which Accounts are or
will be due and owing to Client without defense, offset or counterclaim.

2.02 Factor's Discretion.  Factor shall purchase only such Accounts hereunder
as Factor may select and approve in its sole and absolute discretion.  Factor
shall not have any liability to Client or any of Client's Customers for Factor's
failure or refusal to purchase an Account.

2.03 Assignment Documents.  Client will provide Factor with an assignment of
Account, in a form(s) satisfactory to Factor (including any notices or 
assignment as may be required by Factor), together with the original invoice or 
a true copy of each invoice and/or statement, as may be specified by Factor, 
including evidence of shipment, or other instruments or papers that Factor may 
require.

2.04 Stamping.  At Factor's request, Client will place a sticker on, or stamp,
each original invoice being sent to Factor, indicating that the Account has been
sold to Factor and that payment must be made directly to Factor.  Said stickers
or stamp will be supplied to Client by Factor.

2.05 Notification.  Client agrees to provide Factor a sufficient number of
Notice of Assignment of Account forms, in a form satisfactory to Factor, signed
by authorized representative of Client, which may, at Factor's sole discretion,
be distributed by Factor to each Customer whose Account is assigned and sold to
Factor by Client.  If Factor so requires, it shall be Client's obligation to
ensure that the Notice of Assignment of Accounts form be duly executed by an
authorized representative of the Customer and returned to Factor.

2.06 Part Payment.  Upon approval and acceptance by Factor of an Account, Client
shall be entitled to part payment of the Account in an amount not exceeding 80%
(eighty percent) of the Eligible Amount.

2.07 Processing Fee.  For each Account approved and accepted by Factor
hereunder, Factor shall receive from Client and Client shall be obligated to pay
to Factor a processing fee equal to 1.50% (one and fifty hundredths percent) of
the monthly average Eligible Amount(s).

2.08 Purchase Price.  The purchase price of each Account shall be equal to
98.50% (ninety-eight and fifty hundredths percent) of the Eligible amount; the
purchase price will be reduced in accordance by the Daily Rate beginning as of
the date that Factor makes part payment as to each Account and continuing for
each day thereafter that such Account remains unpaid (the "Purchase Price").

2.09 Collected Reserve.  Upon collection by Factor of an Account purchased by
Factor, Factor may hold in reserve account the difference between the Part
Payment and the Purchase Price ("Collected Reserve").  The Collected Reserve may
be held by Factor as security against charge-backs or any other obligations of
Client to Factor and may be applied by Factor against such charge-backs or other
obligations.  The Collected Reserve is not due and payable to Client until any
and all of Client's obligations to Factor are fully paid and/or satisfied.

2.10 Return of Collected Reserve.  Factor will return to Client the balance of
the Collected Reserve every Wednesday as of the previous Friday only if, in
Factor's sole and absolute discretion, Factor has determined that Client has
complied with all of the terms and conditions of this Agreement, that no events
of default as defined in Article VIII below have occurred and Client 
acknowledges to Factor that there are no offsets or claims against or customer 
disputes relating to any Account purchased by Factor.  However, if the Collected
Reserve as a deficit balance at any time, Client shall be obligated to 
immediately pay to Factor the amount of such deficit.

2.11 Customer Disputes.  Upon the occurrence of any Customer dispute, whether
valid or invalid, Client will immediately pay to Factor, on the Account 
purchased by Factor subject to the Customer Dispute, the amount of any Part 
Payment made on the Account by Factor plus the Factor's Discount.  Further, 
notwithstanding the payment obligation set forth herein, Factor may, in addition
to any other remedies available to Factor under this Agreement, immediately 
charge-back the Account purchased by Factor, which is subject to the Customer 
Dispute, to Client and provide notice thereof to Client.  Any such charge-back 
Account shall be subject to Factor's security interest therein.  Client shall 
notify Factor immediately of any disputes between Customer and Client.  Factor 
may, but is not obligated to settle any Customer Dispute directly with Customer.
Such settlement does not relieve Client of final responsibility for payment of
any such Account purchased by Factor.

2.12 Client's Obligation.  Until all Accounts purchased by Factor are paid or
declared in Factor's own judgment to be uncollectible due to a Credit Problem,
and the Client has met with the requirements of paragraph 2.05 of this 
Agreement, the amount paid for the Account together with the Factor's Discount 
shall be and remain an obligation of Client to Factor.

         III.  WARRANTIES AND REPRESENTATIONS OF CLIENT

     In order to induce Factor to enter into this Agreement, and with full
knowledge that the truth and accuracy of the warranties and representations set
forth in this Agreement are being relied upon by Factor, since time is of the
essence, and a substantial delay could be caused by a complete credit
investigation of each Customer, Client warrants and represents to Factor now, 
and during the term of this Agreement, that:

3.01 Client Organization; Etc.  Client:

     (a)  is duly organized, validly existing and in good standing under the
          laws of the State of Minnesota;

     (b)  has the power and authority to own its properties and carry on its
          business as it is now being conducted, and is to be conducted
          following consummation of the transactions contemplated by this
          Agreement;

     (c)  is qualified to do business in every jurisdiction where such
          qualification is necessary;

     (d)  is duly authorized to conduct such business under the name of
          Astrocom Corporation and such trade name has been properly
          registered as required by the laws of the State of Minnesota; and

     (e)  has the power to execute and deliver this Agreement and to execute
          and deliver to Factor any and all documents required to be executed
          and delivered hereunder.

3.02 Customer Solvency.  To the best knowledge of Client, no Customer of Client
whose Accounts are to be assigned to purchase by Factor, is insolvent.

3.03 Title to Assets.  Client has good title to all inventory and Accounts, free
and clear of all mortgages, liens and encumbrances, covenants or restrictions.

3.04 Validity of Accounts; Etc.  Each Account offered for sale to Factor:  (a)
is an accurate and undisputed (without claim of offset, defense or counterclaim)
statement of indebtedness by Customer to Client, for a sum certain, which is due
and payable within thirty days or less, or within such time as is agreed to, in
writing, by Factor and Client; and (b) arises out of a bona fide absolute sale,
delivery and acceptance of goods (not on consignment, or on approval, or on hold
basis, or subject to any other contingency), or rendition of service by Client
to Customer, made in the ordinary course of Client's business.

3.05 Title to Accounts; Etc.  None of the Accounts being sold to Factor have
heretofore been sold or assigned to any person, firm or corporation, nor has any
security interest in such Accounts been granted to any person, firm or
corporation, or are owed by a Customer who is one of Client's Affiliates.

3.06 No Contravening Agreements.  There are no agreements, verbal or written,
between Client and Customer, or any other party, which would prohibit the sale
of the Customer Account by Client to Factor.

3.07 Authorization, Etc.  The execution and performance by Client of the terns
and provisions of this Agreement and the execution and delivery of any other
documents required to be executed and delivered hereunder have been duly
authorized by all requisite company action, and neither the execution and
performance of this Agreement or any other documents required to be delivered
hereunder, will violate any provision of law, any order of any court or other
agency of government, the articles of incorporation or agreement of partnership,
if any, of Client, or any indenture, agreement or other instrument to which
Client is a party, or by which Client is bound, or be in conflict with, result
in breach of, or constitute (with due notice or lapse of time or both) a default
under, or result in the creation or imposition of any lien, charge or 
encumbrance of any nature whatsoever upon any of the property or assets of 
Client pursuant to, any such indenture, agreement or instrument, except as 
provided in this Agreement.

3.08 No Litigation.  There is no action, suit or proceeding at law or in equity
or by or before any governmental instrumentality or other agency now pending or,
to the knowledge of Client, threatened against or affecting Client which, if
adversely determined, would have a material adverse effect on the business,
operations, properties, assets or condition, financial or otherwise, of Client.

3.09 No Adverse Agreements.  Client is not a party to any material agreement or
instrument or subject to any restriction adversely affecting its business,
properties or assets, operations or condition, financial or otherwise.  Client
is not in default in the performance, observance or fulfillment of any of the
material agreements or instruments to which it is a party.

3.10 No Adverse Event.  Except as disclosed in writing to Factor, there is no
fact known to Client which materially adversely affects the business, 
operations, affairs or condition of Client or any of its properties.

3.11 Taxes.  Client has filed all tax returns required by law to be filed and
has paid all taxes, assessments and other governmental charges levied upon its
properties, assets and income, other than those not yet delinquent.  There are
no unpaid assessments for additional taxes or any basis therefor.

3.12 Compliance With Laws.  Client is in full compliance with all state and
federal laws relating to the conduct of its business.

        IV.  CONDITIONS TO FACTOR'S OBLIGATIONS HEREUNDER

4.01 Conditions Precedent.  The obligations of Factor to perform its obligations
hereunder is subject to the conditions precedent that the representations and
warranties set forth in Article III hereof shall be true and correct on and as
of the date hereof, and on the date each Account is offered to Factor for sale
pursuant to this Agreement; and no Event of Default as specified in Article VIII
hereof, nor any event which upon notice or lapse of time or both would 
constitute such an Event of Default, shall have occurred and be continuing; and 
each offer of an Account for sale to Factor shall constitute a certification to 
such effect as of the date of such offer.

               V. AFFIRMATIVE COVENANTS BY CLIENT

     Client covenants and agrees that, from the date hereof and until
termination of this Agreement and performance of all of Client's obligations
hereunder, Client will, unless otherwise agreed to in writing by Factor:

5.01 Inspection of Records.  Promptly, from time to time, permit Factor to
inspect its books and records, at reasonable business hours, and to make copies
of abstracts thereof, and furnish such other information regarding its
operations, assets, business affairs and financial condition, as Factor may
request.

5.02 Notices.  Promptly notify Factor of:

     (a)  any developments which would materially adversely affect the
          business of Client, its properties or affairs or the ability of
          Client to perform its obligations under this Agreement, or any other
          documents delivered in connection herewith;

     (b)  any material adverse change in Client's condition, financial or
          otherwise;

     (c)  of the occurrence of any Event of Default by Client as defined in
          Article VIII hereof, and of the occurrence of any event which upon
          notice or lapse of time, or both, would constitute such an Event of
          Default; or

     (d)  any change of address of Client.

5.03 Taxes.  Pay all taxes or fees in relation to the Accounts, goods sold or
services rendered, giving rise to the Accounts.

5.04 Factor's Property.  Immediately turn over to Factor and, until doing so,
hold in trust and safekeeping separate and apart from Client's other property 
and as the sole and separate property of Factor any payment on an Account 
purchased by Factor whenever any such payment, whether case, check (payable to 
Client, Factor or both), money order or other form of payment, comes into 
Client's possession, and all goods giving rise to Accounts purchased by Factor 
which are returned or rejected by, or repossessed from Customer(s).

5.05 Book Entries.  Upon the sale of any of its Accounts to Factor, Client will
immediately make proper entries on its books and records disclosing the sale of
such Accounts to Factor.

5.06 Reimbursement of Expenses; Etc.  Reimburse the Factor for its reasonable
expenses, fees and disbursements (including without limitation, reasonable
attorneys' fees and legal expenses and wire transfer fees), incurred in
connection with the preparation or administration of this Agreement or any other
document relating hereto or the Factor's enforcement of the obligations of the
Client under this Agreement or any other such document, whether or not suit is
commenced, which attorneys' fees and legal expenses shall include, but not be
limited to, any attorneys' fees and legal expenses incurred in connection with
any appeal of a lower court's judgment or order.  The Factor is hereby 
authorized to charge from time to time against any reserve account (including, 
without limitation, the Collected Reserve) established by the Factor pursuant to
this Agreement any obligation of Client to Factor hereunder when due.

5.08 Reporting to Factor.  Client shall provide the financial information to
Factor as follows:

     (a)  Client's year end audit reports shall be delivered by Client within
          120 days of Client's respective year ends during the term of this
          Agreement;

     (b)  Client's monthly financial statements, including Client's accounts
          receivable aging and account payable aging, shall be delivered by
          Client by the 30th day of the month immediately following the month
          end to which the financial statements relate.

5.09 Insurance.  Maintain insurance of such types and in such amounts as are
maintained by companies of similar size engaged in the same or similar
businesses; provided, however, that each policy insuring any collateral securing
any and all obligations of Client shall name Factor as the loss payee.

                     VI.  NEGATIVE COVENANTS

     Client covenants and agrees that, until termination of this Agreement and
performance by Client of all of its obligations hereunder, unless Factor shall
otherwise consent in writing, it will not directly or indirectly:

6.01 No Liens.  Create, incur, assume or suffer to exist any pledge, lien,
charge or other encumbrance of any nature whatsoever on any of its Accounts or
inventory, now or hereafter owned.

6.02 No Sale of Assets; Etc.  Sell, lease, transfer or otherwise dispose of any
of its business, except in the ordinary course of its business.

6.03 No Interference With Factor's Rights.  Interfere in any fashion or under
any circumstances with any of Factor's right under this Agreement.

6.04 No Other Sale of Accounts.  Factor or sell its Accounts except to Factor
during the term of this Agreement.

6.05 No Change of Account Terms.  Change or modify the terms of the original
Account with Customer.

6.06 No Pledge of Factor's Credit.  Pledge the credit of Factor to any person
or entity for any purpose whatsoever.

6.07 No Alternations of Payment Schedule.  Alter any Customer payment schedule.

                     VII.  SECURITY INTEREST

7.01 Grant of Securing Interest.  As a further inducement for Factor to enter
into this Agreement, Client hereby grants to Factor, as security for the
repayment of any and all of Client's obligations hereunder, a security interest
in all of Client's accounts and all inventory, equipment, instruments, 
documents, contract rights, chattel paper, general intangibles and the proceeds 
thereof (including any insurance proceeds) now or hereafter owned by Client, or 
in which Client now or hereafter may have any rights, wherever situated and 
whenever acquired.

                         VIII.  DEFAULTS

8.01 Events of Default.  Upon the occurrence of any of the following events
(each of which is herein sometimes called an "Event of Default"):

     (a)  If Client shall fail to pay any of its obligations to Factor when
          due;

     (b)  If Client confesses inability to continue performance in accordance
          with this Agreement;

     (c)  If any representation or warranty made herein or in any report,
          assignment, certificate, financial statement or other instrument
          furnished in connection with this Agreement, shall prove to be false
          or misleading in any material respect;

     (d)  If Client shall fail to perform any covenant, condition or agreement
          contained herein;

     (e)  If Client or any other person liable in whole or in part for payment
          or performance of the obligations contained herein shall (i) apply
          for or consent to appointment of a receiver, trustee, custodian or
          liquidator of it or any of its property; (ii) admit in writing its
          inability to pay its debts as they mature, (iii) make a general
          assignment for the benefit of creditors; (iv) be adjudicated
          bankrupt or insolvent or be the subject of an order for relief under
          Title 7 or 11 of the United States Code or (v) file a voluntary
          petition in bankruptcy, or a petition or an answer seeking
          reorganization or an arrangement with creditors or to take advantage
          of any bankruptcy, reorganization, insolvency, readjustment of debt,
          dissolution or liquidation law or statute, or an answer admitting
          the material allegation of a petition filed against it in any
          proceeding under any such law, or if a corporate action shall be
          taken for the purpose of effecting any of the foregoing;

     (f)  If any order, judgment or decree shall be entered, without the
          application, approval or consent of Client by any court of competent
          jurisdiction, approving a petition seeking reorganization of Client
          or appointing a receiver trustee, custodian or liquidator of Client,
          or of all or a substantial part of the assets of Client;

     (g)  If there occurs any attachment on any deposits or other property of
          Client in the hands or possession of Factor;

     (h)  If any "default" (however defined) shall occur under any guaranty of
          Client's obligations hereunder;

then, and in every such Event of Default and at any time thereafter during the
continuance of such event, Factor may take any one or more of the following
actions; (i) charge back to Client all outstanding Accounts and declare all
obligations secured hereby immediately due and payable; (ii) enforce the 
security interest given hereunder pursuant to the Uniform Commercial Code or any
other law; (iii) enforce the security interest given hereunder pursuant to the 
Uniform Commercial Code or any other law; (iii) require Client to assemble the 
Collateral and the records pertaining to the Accounts and make them available to
Factor at a place designated by Factor; (iv) enter the premises of Client and 
take possession of the Collateral and of the records pertaining to the Accounts 
and any other Collateral; (v) grant extensions, compromise claims and settle the
Accounts for less than the face value, and without prior notice to Client; (vi)
use, in connection with any assembly or disposition of the Collateral, a
trademark, trade name, copyright, patent right or technical process used or
utilized by Client without payment of any license fee or royalty to Client; 
(vii) retain any surplus realized to cover Client's obligations to Factor and 
hold Client liable for any deficiency as provided in the Uniform Commercial 
Code; (viii) offset any funds held by Factor in any reserve account for 
obligations of Client to Factor, including but not limited to legal fees or 
other costs associated with the collection of Accounts, or pursue any other 
remedy at law or equity which Factor may have.

                       IX.  MISCELLANEOUS

9.01 Survival of Agreement; Etc.  This Agreement and all covenants, agreements,
representations and warranties made herein, shall survive the purchase by Factor
of the Accounts hereunder, and shall continue in full force and effect, so long
as Client shall have any obligations to Factor hereunder.  Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the heirs, personal representatives, legal representatives,
successors and assigns of such parties; and all covenants, promises and
agreements in this Agreement contained, by or on behalf of Client, shall inure
to the benefit of the successors and assigns of Factor.

9.02 Factor's Property.  Once Factor has purchased an Account, payment on such
Account by Customer is the sole property of Factor.

9.03 Appointment of Attorney-in-Fact.  In order to carry out this Agreement and
avoid unnecessary notification to Customers, Client irrevocably appoints Factor,
or any person designated by Factor, its special attorney-in-fact or agent, with
power to:

     (a)  Delete Client's address on all invoices and statements mailed to
          Customers and to substitute in its place Factor's address;

     (b)  Receive, open and dispose of all mail addressed to Client or to
          Client's trade name at Factor's address;

     (c)  Endorse the name of Client or Client's trade name on any checks or
          other evidences of payment that may come into the possession of
          Factor with respect to any Collateral;

     (d)  In Client's name, or otherwise, to demand, sue for, collect, receive
          and give acquittance for any and all monies due or to become due on
          Accounts purchased by Factor;

     (e)  To settle, compromise, compound, prosecute or defend any action or
          proceeding with respect to said Accounts;

     (f)  To extend the time of payment of any or all of the Accounts
          purchased by Factor and to make any allowances and other adjustments
          with reference thereto;

     (g)  Offer discounts to Client's Customer exclusive of Client's normal
          business custom with said Customer where necessary to affect
          collection; and

     (h)  To do any and all things necessary and proper to carry out the
          purpose of this Agreement.  The authority granted pursuant to this
          power of attorney shall continue in full force and effect until all
          Accounts purchased by Factor have been paid in full.

9.04 Open Items.  Should Factor receive a double payment on an Account or other
payment which is not identified, Factor shall carry such sums as open items and
shall return to Client or Customer upon proper notification.

9.05 Indemnifications of Factor.  Client shall hold Factor harmless against any
Customer ill will arising from Factor's collecting or attempting to collect any
Account.

9.06 Term of Agreement.  This Agreement shall continue in full force and effect
until April 3, 1998 ("Initial Termination Date").  Factor may terminate this
Agreement at any time.  Absent termination of this Agreement by Factor, or as
provided elsewhere in this Agreement, this Agreement shall automatically and
continually renew for successive periods of six months (each such period 
referred to as a "Renewal Period") from the Initial Termination Date or the end 
of a Renewal Period unless, Client, no less than thirty (30) days prior to the 
Initial Termination Date or the expiration of a Renewal Period:  (a) gives 
Factor written notice to terminate this Agreement; and (b) pays Factor as 
liquidated damages an amount equal to the Monthly Minimum as set forth in 
Section 9.07 for each month or part of a month between the stated termination 
date and the Initial Termination Date or end of a Renewal Period, whichever is 
applicable.

9.07 Monthly Minimum.  Client agrees to generate a minimum of fees to Factor in
the amount of $2,000.00 per month during the term of this Agreement (such 
minimum fees to be referred to as the "Monthly Minimum").  Should Factor not 
receive the Monthly Minimum or for any month during the term of this Agreement, 
Client agrees to remit immediately to Factor the difference between the Monthly 
Minimum and the fees actually generated through factoring for such month.  
Remittance of the difference to Factor shall be made as follows:  by Factor's 
deducting the difference from Client's Assignment and Schedule of Accounts, 
Reserve Release and/or any collateral securing Client's obligations to Factor, 
or by Client's direct payment to Factor of such difference.

9.08 Survival of Security Interest; Etc.  After termination of this Agreement,
Client shall remain fully responsible to Factor for any Accounts purchased 
before such termination and Factor's security interest shall survive such 
termination until all of Client's obligations hereunder shall have been fully 
paid and/or satisfied.

9.09 Binding Effect; Etc.  This Agreement shall inure to the benefit of and be
binding upon the heirs, executors, administrators, successors and assigns of the
parties hereto.

9.10 Rights and Remedies.  No failure on the part of Factor to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise by Factor of any right, power or remedy under this
Agreement preclude any other right, power or remedy.  The remedies in this
Agreement are cumulative and are not exclusive of any other remedies provided by
law.

9.11 Governing Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Minnesota.  Unless otherwise defined 
herein, or unless the context otherwise requires, all terms used herein which 
are defined in the Minnesota Uniform Commercial Code have the meanings therein 
stated.

9.12 Consent to Jurisdiction; Etc.  Client hereby consents to the jurisdiction
of the courts of the State of Minnesota and the United States District Court for
the District of Minnesota for the purpose of any suit, action or other 
proceeding arising out of any of its obligations hereunder or with respect to 
the transactions contemplated hereby, and expressly waives any and all 
objections it may have as to venue in any of such courts.  CLIENT AND FACTOR 
ALSO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS 
AGREEMENT.

9.13 Factor's Customer Notification Rights; Etc.  Factor may in its sole
discretion give notice of assignment to any and all Customers of Client and
collect Accounts directly from such Customers.

9.14 Notices.  All notices and communications hereunder shall be given or made
to the parties at their respective addresses set forth in the first paragraph of
this Agreement, or at such other address as the addressee may hereafter specify
for the purpose by written notice to the other party hereto.  Such notices and
other communications will be effectively given only if and when given in writing
and delivered at the address set forth herein or duly deposited in the mails 
with first-class postage prepaid, or delivered to a telegraph company with all 
charges prepaid, addressed as aforesaid.

9.15 Separability.  If any provision hereof is held invalid, illegal or
unenforceable in any jurisdiction, for any reason whatsoever, the other
provisions hereof shall remain in full force and effect in such jurisdiction and
to that end provisions hereof are declared to be severable and the remaining
provisions shall be liberally construed in favor of Factor.

9.16 Headings.  The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto all
as of the day and year first above written.

PRINCIPAL RESOURCES, LLC                ASTROCOM CORPORATION

By  _______________________        By  ______________________
Its  ______________________        Its ______________________

                                        By _______________________
                                        Its ______________________

<PAGE>
                         Exhibit 10(xv)

      WARRANT ISSUED TO RONALD B. THOMAS DATED JULY 2, 1997


              WARRANT FOR PURCHASE OF COMMON STOCK
                               OF
                      ASTROCOM CORPORATION
                    (A Minnesota Corporation)

                        2,892,403 shares


     This certifies that Ronald B. Thomas (hereinafter the "Holder"), is
entitled to purchase from Astrocom Corporation (hereinafter the "Company")
2,892,403 fully paid and nonassessable shares of Common Stock of the Company,
par value $.10 per share, pursuant to the terms and conditions hereinafter set 
forth, at the price of $.47 per share.

     1.   The rights represented by this Warrant shall vest as follows:

          (a)  No shares may be purchased prior to January 2, 1998.

          (b)  The right to purchase 964,134 shares may be exercised at any
               time from January 2, 1998 through July 1, 2007, in whole or in
               part, but only if Holder has remained an employee of the
               Company, without a break in service, during the period July 2,
               1997 through January 1, 1998.

          (c)  The right to purchase 964,134 shares may be exercised at any
               time from July 2, 1998 through July 1, 2007, in whole or in
               part, but only if Holder has remained an employee of the
               Company, without a break in service, during the period July 2,
               1997 through July 1, 1998.

          (d)  The right to purchase 964,135 shares may be exercised at any
               time from July 2, 1999 through July 1, 2007, in whole or in
               part, but only if Holder has remained an employee of the
               Company, without a break in service, during the period July 2,
               1997 through July 1, 1999.

Provided, however, that in the event that Holder has remained an employee of the
Company, without a break in service, during the period July 2, 1997 through
January 1, 1998, the right to purchase the 964,134 shares otherwise becoming
exercisable pursuant to subparagraph (c) above shall become exercisable on such
earlier date, if any, on which any one of the benchmarks set forth below has 
been achieved, and the right to purchase the 964,135 shares otherwise becoming
exercisable pursuant to subparagraph (d) above shall become exercisable on such
earlier date, if any, on which any two of the benchmarks set forth below have
been achieved:


THIS WARRANT IS SUBJECT TO THE TERMS OF THE LEGEND SET FORTH ON THE LAST PAGE
HEREOF.<PAGE>
          

               The Company sells its Port Extender technology for $200,000 or
               more.

               The Company receives an equity investment or bridge loans,
               with a term of at least nine months, in the aggregate amount
               of $500,000.

               The Company has two consecutive months of at least break-even
               performance.

               The Company has $900,000 in revenue for a calendar quarter.

               The Company has $5,000,000 in revenue for a period of twelve
               consecutive months.

               The Company has net income during a period of twelve
               consecutive months.

               The Company receives ISO 9000 certification.

     The rights represented by this Warrant may be exercised, when vested as
provided above, by the surrender of this Warrant at the principal office of the
Company and upon payment to the Company by certified check or bank draft of the
purchase price for the shares to be purchased.  Holder shall also execute and
deliver such agreements and representations concerning Holder's intention not to
distribute the Common Stock so obtained and such other matters as the Company 
may reasonably request in order to permit issuance of the shares of Common Stock
pursuant to exemptions from registration under federal and state laws, provided,
however, that the unavailability of any such exemption shall not affect the
Company's obligation to issue shares of its Common Stock pursuant hereto.  Upon
any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to Holder within a reasonable
time, not exceeding fifteen days, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to Holder within
such time.

     2.   (a)  If at any time the Company receives a written request therefor
from Holder with respect to shares of Common Stock issued pursuant to this
Warrant not theretofore registered under the Securities Act of 1933 (the "Act"),
the Company shall prepare and file a Registration Statement on Form S-3 (or any
successor form subsequently promulgated by the Securities and Exchange 
Commission as a replacement for Form S-3) under the Act covering the shares 
which are the subject of such request and shall use its best efforts to cause 
such Registration Statement to become effective.  The Company shall be obligated
to prepare, file and cause to become effective one Registration Statement on 
Form S-3 pursuant to this subparagraph 2(a).  In the event that Holder 
determines for any reason not to proceed with the registration at any time 
before the Registration Statement has been declared effective by the Securities 
and Exchange Commission, and Holder requests the Company to withdraw such 
Registration Statement (if theretofore filed), and such Registration 
Statement is withdrawn with respect to the shares covered thereby, and 
Holder agrees to bear his own expenses incurred in connection therewith and 
to reimburse the Company for the expenses incurred by it attributable to the 
registration of such shares, then Holder shall not be deemed to have 
exercised his right to require the Company to register shares pursuant to 
this subparagraph 2(a).

          (b)  If at any time the Company shall determine to proceed with the
actual preparation and filing of a Registration Statement under the Act in
connection with the proposed offer and sale for money of any of its securities
by it or any of its securityholders, the Company shall give written notice to
Holder, and upon the written request of Holder given within 30 days after 
receipt of such notice from the Company, the Company will, except as herein 
provided, cause all shares of Common Stock issued to Holder pursuant to the 
exercise of this Warrant to be included in such Registration Statement, to the 
extent requested by Holder in writing within said 30-day period; provided, 
however, that the Company shall not be required to give notice or include any 
shares of Common Stock in such registration if the proposed registration is of 
an employees' stock option, stock purchase or compensation plan and the shares 
of Common Stock held by Holder cannot be included in the registration form 
appropriate thereto, or if the securities are proposed to be issued in exchange 
for securities or assets or in connection with a merger with or acquisition of 
another corporation.  If any registration pursuant to this section shall be 
underwritten in whole or in part, the Company may require that Holder's 
shares requested for inclusion pursuant to this section be included in the 
underwriting on the same terms and conditions as the securities otherwise 
being sold through the underwriters; and if in the good faith judgment of 
the managing underwriter of such public offering the inclusion of all of 
Holder's shares covered by the request of Holder for registration under
this section would reduce the number of shares to be offered by the Company (or
the prospective seller of the shares to be registered, if other than the 
Company) or interfere with the successful marketing of the shares to be offered 
by the Company (or the prospective seller of the shares to be registered, if 
other than the Company), the number of shares of Holder otherwise to be included
in the underwritten public offering under this section may be eliminated or 
reduced.

          (c)  With respect to any registration pursuant to subparagraphs 2(a)
or 2(b) above, the Company shall bear the following fees, costs and expenses: 
All registration, filing and NASD fees, printing expenses, fees and 
disbursements of counsel and accountants for the Company, fees and disbursements
of counsel for the underwriter or underwriters of such securities (if required 
by such underwriter or underwriters), all internal Company expenses, the 
premiums or other costs of all policies of insurance against liability arising 
out of the public offering, and all legal fees and disbursements and other 
expenses of complying with state securities laws.  Underwriting discounts and 
commissions and transfer taxes for the shares sold by Holder and any other 
expenses incurred by Holder not expressly included above shall be borne by 
Holder.

     3.   The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be fully paid and nonassessable and free from all taxes, liens, and charges with
respect to the issuance thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issuance upon the exercise of the subscription rights evidenced by
this Warrant, a sufficient number of shares of its Common Stock to provide for
the exercise of the rights represented by this Warrant.

     4.   In the event that the Company shall, at any time prior to the
expiration date of this Warrant and prior to the exercise hereof: (a) declare or
pay to the holders of the Common Stock a dividend payable in any kind of shares
of stock of the Company; or (b)
change or divide or otherwise reclassify its Common Stock into the same or a
different number of shares with or without par value, or into shares of any 
class or classes; or (c) consolidate or merge with, or transfer its property as
an entirety or substantially as an entirety to, any other corporation; then, 
upon the subsequent exercise of this Warrant, Holder shall receive for the 
exercise, such additional shares of stock of the Company, or such reclassified 
shares of stock of the Company, or such shares or securities of the Company or 
any other entity resulting from the occurrence of any such event which he would 
have been entitled to receive had he exercised this Warrant prior to the 
happening of any of the foregoing events.

     5.   The certificates representing the shares to be issued upon exercise
of the rights represented by this Warrant which have not been registered under
applicable federal and state laws will bear a legend substantially as follows:

     "The securities represented by this certificate have not been
     registered under the Securities Act of 1933 or the securities act of
     any state.  The securities have been acquired for investment and may
     not be sold, transferred for value, pledged, hypothecated or
     otherwise encumbered unless (1) pursuant to an effective
     registration of them under the Securities Act of 1933 and the
     applicable securities act of any state, or (2) there is presented to
     the corporation an opinion of counsel acceptable to counsel for the
     corporation to the effect that such registration is not required."

By exercise of this Warrant Holder agrees to be bound by the terms of such
legend.

     6.   This Warrant shall not entitle Holder to any voting rights or other
rights as a stockholder of the Company.

     7.   This Warrant shall not be transferable by Holder, other than pursuant
to registration under federal and state securities laws or an exemption from 
such registration, the availability of which shall be reasonably determined by 
the Company, and then only: (a) to members of the immediate family of Holder or
trusts for the benefit of the immediate family of Holder; or (b) as provided in
paragraph 8 below.

     8.   In the event of the death of Holder prior to the expiration date of
this Warrant, and prior to its exercise, this Warrant shall be exercisable to 
the extent provided above until the expiration date of this Warrant, but only by
the executors or administrators of the estate of Holder or by the persons to 
whom Holder's rights shall pass by Holder's Will, or the laws of descent and
distribution.

     9.   This Warrant is being executed and delivered in the State of
Minnesota, and this Warrant shall be construed in accordance with the laws of
such State.

     10.  This Warrant shall expire and be void unless exercised on or before
July 1, 2007.

     WITNESS the signature of the Company's duly authorized officer as of the
2nd day of July, 1997.
                              ASTROCOM CORPORATION

                              By _______________________________________
                              Its Chairman of the Board

THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 ("THE ACT") OR UNDER APPLICABLE STATE LAWS.  THE WARRANT
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED EXCEPT AS PROVIDED ABOVE
AND NO TRANSFER OF IT WILL BE MADE BY THE CORPORATION OR ITS TRANSFER AGENT IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE WARRANT UNDER THE 
ACT, AS AMENDED, A "NO ACTION" LETTER OF THE SECURITIES AND EXCHANGE COMMISSION,
OR AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED. FURTHERMORE THE WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED EXCEPT AS PROVIDED ABOVE AND NO TRANSFER OF IT WILL BE MADE BY THE
CORPORATION OR ITS TRANSFER AGENT IN THE ABSENCE OF AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION THAT SUCH TRANSFER DOES NOT REQUIRE COMPLIANCE 
WITH APPLICABLE STATE LAW OR THAT SUCH COMPLIANCE HAS BEEN EFFECTED.

<PAGE>
                            Exhibit 13

                        REGISTRANT'S 1997
                  ANNUAL REPORT TO SHAREHOLDERS































                     2700 Summer Street N.E.
                Minneapolis, Minnesota 55413-2820
                         (612) 378-7800
<PAGE>
TO OUR SHAREHOLDERS:

[To be provided at a later date.]

<PAGE>
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Astrocom, a public company (O.T.C, ATCC), was incorporated in 1968 to design,
manufacture and distribute telecommunication products to serve the short-haul
communication market by providing line drivers and other equipment for local 
area networks (LANs). In 1989 the Company developed high speed digital access
communications equipment linking facilities through wide area networks (WANs). 
Astrocom's CSU/DSUs (Channel Service Unit/Digital Service Unit) function as an
interface to high bandwidth telephone company services for such applications as
high-speed Internet access, video conferencing, and corporate internetworking. 
Astrocom multiplexers reduce telecommunications costs by combining up to seven
separate paths into a single communication line.  Astrocom products are used by
Internet service providers, telephone service providers, government and
educational entities, private enterprises and others.  Astrocom sells its
products through a direct sales force, as well as a network of distributors and
value-added resellers (VARs).  The Company is also an original equipment
manufacturer (OEM) for a major computer networking products catalog.

RESULTS OF OPERATIONS

The following table presents selected financial information derived from the
Company's statements of operations expressed as a percentage of net sales for 
the years indicated.

             Percentage of Net Sales for Years Ended December 31,
                            1997      1996        1995
Net Sales                  100.0%    100.0%    100.0%
Cost of Sales              (87.3)    (74.7)    (64.1)
Write-off of Inventory      --        --       (12.5)
Gross Profit                12.7      25.3      23.4
Selling and Administrative (46.1)    (52.1)    (40.1)
Research and Development   (15.4)    (13.5)    (13.9)
Operating Loss             (48.8)    (40.3)    (30.6)
Other Income (Expense)      (3.1)     (2.6)     (3.5)
Net Loss                   (51.9%)   (42.9%)   (34.1%)

1997 COMPARED TO 1996 

NET SALES for the year ended December 31, 1997 increased by 11% to $3,646,000
compared to $3,287,000 for the same period ended December 31, 1996.  This
increase is largely the result of strong market acceptance of the Company's new
T-1 products.  Products introduced within the last 15 months accounted for 56%
of the Company's 1997 sales.  Sales were led by the Company's newest product, 
the Astrocom SP-100, with approximately 43% of period sales.

GROSS PROFIT for the year ended December 31, 1997 was $464,000 compared to
$832,000 in 1996 (13% and 25% of net sales, respectively).  The decrease can be
attributed to a combination of pricing pressures on the older product line and
higher initial costs in the production of the new product line.  Adjustments to
pricing and product costs made during the second half of the year had a positive
impact on the final results and should continue to improve in 1998.

In the first quarter of 1997, the Company recorded a $329,000 writedown of
inventory due to:  1) reserves recorded from the loss of a contract and ongoing
product changes, and 2) inventory which could not be accounted for due to 
changes in the Company's accounting system and personnel.

SELLING AND ADMINISTRATIVE EXPENSES decreased slightly to $1,681,000 in 1997 
from $1,712,000 in 1996.  Expenses of $1,082,000 were incurred in the first six
months of the year when the Company was pursuing marketing activities related to
development of a new corporate image and product positioning.   Administrative
expenses were high in that six month period because of professional fees to
recruit new management and consulting expenses related to the implementation of
a new integrated management system and reconstruction of prior period financial
statements.

RESEARCH AND DEVELOPMENT EXPENSES increased by 26% to $560,000 in 1997 from
$445,000 in 1996.  This increase was a direct result of the added personnel
expenses when the Company hired a team of experienced networking engineers in 
the fourth quarter of 1996 in order to accelerate the new product development
process.  R&D expenses were also increased in the first quarter of 1997 by 
higher spending on product testing, prototype parts and outside services in 
connection with the new product introduction.  Most of these expenses were 
eliminated with the reduction in personnel at the end of the second quarter.

OTHER INCOME (EXPENSE) was $(113,000) for the period ending December 31, 1997
compared to $(86,000) for the same period in 1996.  The increase can be
attributed to the high effective interest rate associated with the bridge
financing raised during the third quarter.  The Company raised $510,000 of 12%
convertible debt.  Because the debt is convertible to common stock at a discount
from the market price and included detachable warrants, the debt was discounted
from its face value and will be accreted over the term of the loan as a non-cash
interest expense.  Other income and expense reflected gains on the sale of
intangible assets and losses on the disposal of equipment.

NET LOSS increased 34% to $(1,891,000) in 1997 from $(1,411,000) in 1996.  The
greater loss is attributable to the combination of lower gross margins, the
writedown of inventory, higher R&D expenses and the interest associated with the
bridge financing.  All but $117,000 of this loss was incurred in the first six
months of the year.

1996 COMPARED TO 1995

NET SALES for the year ended December 31, 1996 increased 3% to $3,287,000 from
$3,178,000 for the same period ended December 31, 1995.  This increase in sales
was primarily attributable to an increase in sales of the NX-1 product and the
introduction of the T-Series product in late 1996.

GROSS PROFIT for the year ended December 31, 1996 declined to $832,000 in 1996
from $1,141,000 (before inventory write-off) in 1995.  The gross margin declined
to 25% in 1996 from 36% in 1995, because of a combination of competitive pricing
pressure and product cost issues related to the new product.

SELLING AND ADMINISTRATIVE EXPENSES increased by 34% to $1,711,000 in 1996 from
$1,274,000 in 1995.  A combination of increased sales and marketing expenditures
and additions to staff accounted for the increases.  Sales and marketing efforts
were enhanced by the addition of experienced sales personnel, reorganization of
the distributor network and increased advertising and promotional activities. 
Increased administrative expenses stemmed from the addition of a chief operating
officer and other senior managers.

RESEARCH AND DEVELOPMENT EXPENSES increased slightly to $445,000 in 1996 from
$442,000 in 1995.  The Company substantially increased its research and
development efforts in the fourth quarter of 1996 by recruiting a team of
experienced telecommunications engineers and accelerating development efforts on
the new product families, the T-1000 and SP100, which are full-featured T1 and
fractional T1 CSU/DSUs.

OTHER INCOME (EXPENSE) decreased 23% to ($86,000) in 1996 from ($112,000) in
1995.  Lower interest expense was a result of lower levels of borrowing in the
final months of 1996, as a result of the Company's securities offering.

NET LOSS increased 30% to $(1,411,000) in 1996 from $(1,085,000) in 1995.  The
net loss increased due to a combination of declining gross margin and the
increased operating expenses associated with additional staff and product
development and marketing expenses.

LIQUIDITY AND RESOURCES

During 1997 the Company's operations were funded primarily by cash on hand and
accounts payable.  Accordingly, net working capital declined to $98,000 on
December 31, 1997 from $1,423,000 on December 31, 1996.  In addition, cash from
financing activities included $510,000 raised through convertible debt and
detachable warrants, $146,000 from the exercise of options and warrants and
$63,000 from a factoring agreement.

The Company's bank line of credit expired on September 30, 1997.  This source of
financing was replaced by a factoring and security agreement with Principal
Resources, LLC on October 3, 1997.  The commitment size is $1,000,000 and the
Company may assign 80% of eligible accounts receivable at prime plus 2.5% plus
1.5% of the monthly average gross face amount of assigned invoices.  The
agreement extends through July 3, 1998 and is automatically renewable for
successive six month periods unless terminated by Principal Resources, LLC.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.  The
Company has experienced operating losses in each of fiscal years 1994 through
1997, depleting most of its available capital.  The Company is dependent on
returning to profitable operations and future financing activities to continue
as a going concern.  Management is evaluating financing alternatives; however,
there can be no assurance that the Company will be successful in obtaining
financing on terms favorable to the Company.

Management believes it will maintain short-term liquidity by factoring its
accounts receivable, continuing to manage its accounts payable, and controlling
its inventory levels.  In the longer term, liquidity is dependent upon returning
to profitable operations that generate adequate cash flow to meet current
obligations on a timely basis.  To that end, significant expense reductions have
been enacted, including a reduction in personnel and changes in pricing and
distributor agreements in order to improve gross margins.

To address the longer term goals of the Company, management has begun to explore
financing alternatives.  Proceeds from a private placement of debt or equity 
will replace the existing bridge financing.  Additional funds will be used to 
grow the business by restarting development activities and pursuing attractive 
business opportunities as they arise.

Because of uncertainties regarding the achievability of management's plans, no
assurance can be given about the Company's ability to continue in existence.  
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from this uncertainty.

YEAR 2000 ISSUES

Computer programs have historically been written to abbreviate dates by using
two digits instead of four digits to identify a particular year.  The so called
"Year 2000" problem or "millennium bug" is the inability of computer software or
hardware to recognize or properly process dates ending in "0".  The Company has
reviewed its products and internal information systems and believes that the
costs and effort to address the Year 2000 problem will not be material to its
business, financial condition or results of operations.
<PAGE>
                   
         Financial Statements
                   
         Astrocom Corporation
                   
         December 31, 1997 and 1996
                   
                       <PAGE>
                    Astrocom Corporation
                              
                    Financial Statements
                              
                              
                 December 31, 1997 and 1996
                              
                              
                              
                              
                              
                          Contents
                              
  Report of Independent Auditors 
  
  Audited Financial Statements
  
  Balance Sheets 
  Statements of Operations 
  Statements of Shareholders  Equity (Deficit) 
  Statements of Cash Flows 
  Notes to Financial Statements
  
  
  
  <PAGE>
                              
                              
                              
                              
                              
               Report of Independent Auditors
  
  
Board of Directors
Astrocom Corporation
  
We have audited the accompanying balance sheets of Astrocom Corporation as of
December 31, 1997 and 1996, and the related statements of operations,
shareholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
  
We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
  
In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Astrocom Corporation at 
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the years then ended, in conformity with generally accepted 
accounting principles.
  
The accompanying financial statements have been prepared assuming Astrocom
Corporation will continue as a going concern. As more fully described in Note 12
the Company has experienced continued operating losses in each of fiscal years
1994 through 1997, depleting most of its available capital. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or 
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.
  
  
  
Minneapolis, Minnesota
February 27, 1998

<PAGE>
<TABLE>
<CAPTION>


                    Astrocom Corporation
                              
                        Balance Sheet
                              
                      December 31, 1997
                              
                                                      December 31
<S>                                                   1997      1996
<C>
Assets                                            
Current assets:                                   
Cash                                                  $   32,000  $  979,000
Accounts receivable, less allowance of $40,000
in 1997 and $15,000 in 1996                              558,000     594,000
Inventories                                              521,000     728,000
Prepaid expenses                                          45,000      32,000
Total current assets                                   1,156,000   2,333,000
                                                  
Buildings, machinery, and equipment:              
Buildings                                                  5,000       5,000
Machinery and equipment                                1,262,000   1,243,000
Office furniture and fixtures                            854,000     830,000
Total buildings, machinery and equipment               2,121,000   2,078,000
Accumulated depreciation                              (1,730,000) (1,638,000)
                                                         391,000     440,000
                                                  
Demonstration inventory                                               22,000
Other assets                                               7,000      11,000
                                                  
Total assets                                          $1,554,000  $2,806,000
</TABLE>                              
<PAGE>                              
<PAGE>
                             
<TABLE>
<CAPTION>
                              
Liabilities and shareholders' equity              
                                                      December 31
                                                      1997          1996
<S>                                                <C>
Current liabilities:                              
Notes payable to bank                                 $           $  444,000
Short-term notes payable                                 364,000      
Accounts payable                                         507,000     367,000 
Payable to factor                                         63,000       
Accrued expenses                                         112,000      69,000
Current portion of lease settlement costs                 12,000      30,000
Total current liabilities                              1,058,000     910,000
                                                  
Lease settlement costs                                    68,000      62,000
                                                  
Long-term debt                                                         1,000
                                                  
Shareholders' equity:                             
Preferred stock, $1.00 par value:                 
  Authorized share - 5,000,000                       
  Issued and outstanding shares - 200,000                200,000     200,000
Common stock, $.10 par value:                     
  Authorized shares - 50,000,000                    
  Issued and outstanding shares -10,464,951              
    (9,863,829 in 1996)                                1,046,000   986,000
Additional paid-in capital                             6,975,000   6,537,000
Accumulated deficit                                   (7,793,000) (5,890,000)
Total shareholders' equity                               428,000   1,833,000
Total liabilities and shareholders' equity            $1,554,000  $2,806,000
                              
                              
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                    Astrocom Corporation
                              
                  Statements of Operations
                              
                              
                              
                                       Year ended December 31
                                           1997         1996
<S>                                    <C>          <C>           
Net sales                              $ 3,646,000  $ 3,287,000
Cost of products sold                    3,182,000    2,455,000
Gross profit                               464,000      832,000
                                                 
Selling and administrative expenses      1,681,000    1,712,000
Research and development expenses          560,000      445,000
Operating expenses                       2,241,000    2,157,000
                                                 
Operating loss                          (1,777,000)  (1,325,000)
                                                 
Other income (expense):                          
Interest income                             15,000       11,000
Interest expense                          (147,000)     (97,000)
Other income                                19,000          
Net loss before income taxes            (1,890,000)  (1,411,000)

Income taxes                                 1,000          
Net loss                                (1,891,000)  (1,411,000)               
                                 
Less preferred stock dividends              12,000        9,000
Loss applicable to common stock        $(1,903,000) $(1,420,000)
                                                       
Net loss per common share              $    (.19)   $    (.22)
    basic and diluted
Weighted average number of common                 
    shares outstanding                  10,050,564    6,296,494
                              
                              
See accompanying notes.
</TABLE>

<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                              Astrocom Corporation
                                        
                  Statements of Shareholders' Equity (Deficit)
                                        
                                           
                                                                             Additional               
                                    Prefered        Common  Stock            Paid-In        Accumulated
                                     Stock        Shares       Amount         Capital       Deficit        Total
<S>                              <C>          <C>         <C>            <C>                   <C>           
  <C>      
Balance, December 31, 1995        $            $6,015,702    $ 601,000      $3,660,000   $(4,470,000) $(209,000)
 Issuance of common stock, net of                                             
    offering costs of $455,000                  3,501,000      350,000       2,696,000                3,046,000
 Issuance of preferred stock for   
    debt conversion                  200,000                                                            200,000
 Issuance of common stock for
    retirement plan                                 3,961                        8,000                    8,000
 Issuance of common stock                          66,666        7,000          43,000                   50,000 
 Exercise of warrants                             231,500       23,000          77,000                  100,000
 Issuance of common stock for
    Directors' fees                                45,000        5,000          53,000                   58,000 
 Dividends on preferred stock                                                                 (9,000)    (9,000)
 Net loss                                                                                 (1,411,000)(1,411,000)
Balance, December 31, 1996         $ 200,000   $9,863,829    $ 986,000      $6,537,000   $(5,890,000)(1,833,000)
 Exercise of warrants and stock
    options                                       363,772       36,000         110,000                  146,000
 Beneficial conversion features
    of notes payable and 
    related warrants                                                           165,000                  165,000
 Issuance of common stock for
    Director's fees                                43,750        4,000          28,000                   32,000
 Dividends on preferred stock                                                                (12,000)   (12,000)
 Issuance of warrants for services
    provided                                                                    44,000                   44,000
 Issuance of common stock for
    services provided                              86,450        9,000          51,000                   60,000
 Issuance of common stock for
    debt conversion                               107,150       11,000          40,000                   51,000
 Net loss                                                                                 (1,891,000)(1,891,000)

Balance, December 31, 1997         $ 200,000   10,464,951  $1,046,000       $6,975,000   $(7,793,000) $ 428,000 
                             
                                      
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>   
                  Astrocom Corporation
                              
                  Statements of Cash Flows
                              
                     
                              
                                                     Year ended
                                                     December 31
                                                   1997      1996
<S>                                          <C>           <C>
Cash flows from operating activities              
Net loss                                     $(1,891,000)  $(1,411,000)
Adjustments to reconcile net loss to net           
  cash used in operating activities:
    Depreciation and amortization                 95,000       135,000
    Amortization of debt discount                 69,000          
    Net gains on disposal of equipment           (14,000)         
    Issuance of stock to directors and                                  
       employees                                  32,000        66,000
   Interest on debt converted to common stock      1,000          
   Professional fees paid in warrants and                         
       stock                                     104,000
   Changes in assets and liabilities:                 
       Accounts receivable                        36,000        22,000 
       Inventories                               207,000      (408,000)
       Prepaid expenses                          (13,000)      (18,000)
       Other assets                               26,000        (4,000)
       Accounts payable                          140,000      (237,000)
       Accrued expenses                           34,000         3,000
Net cash used in operating activities         (1,174,000)   (1,852,000)
                                                   
Cash flows from investing activities               
Purchases of equipment                           (92,000)     (206,000)
Proceeds from sale of equipment                   60,000             
Net cash used in investing activities            (32,000)     (206,000)
                                                   
Cash flows from financing activities               
Proceeds from sale of stock                                  3,096,000
Cash received from exercise of warrants          146,000       100,000
Dividends paid                                    (3,000)       (9,000)
Net proceeds from factoring arrangement           63,000          
Proceeds from issuance of convertible debt       510,000          
Payments on notes payable and lease
  settlement obligations                        (457,000)     (231,000)
Net cash provided by financing activities        259,000     2,956,000
                                                   
Decrease in cash                                (947,000)      898,000
Cash at beginning of year                        979,000        81,000
Cash at end of year                         $     32,000    $  979,000
                                                   
Supplemental cash flow information                 
Conversion of subordinated debt into    
   preferred stock                          $               $  200,000
Conversion of notes payable into common
   stock                                          51,000             
                              
See accompanying notes.

</TABLE>
<PAGE>

<PAGE>
1. Nature of Business and Significant Accounting Policies
  
Nature of Business and Operations
  
Astrocom Corporation (the  Company ) designs, manufactures, and markets
advanced digital communications equipment for the data transmission needs
of corporations and other large organizations. The principal markets for the
Company's products are the United States, Europe and Asia.
  
Cash and Cash Equivalents
  
For purposes of reporting cash flows, the Company considers all investments
with a maturity of three months or less when purchased to be cash
equivalents.
  
Inventories
  
Inventories are stated at the lower of cost or market, determined on an
average cost basis.
  
Buildings, Machinery and Equipment
  
Buildings, machinery and equipment, including assets under capital leases,
are carried at cost and depreciated over 5 to 10 years using the straight-line 
or double declining balance methods.
  
Income Taxes
  
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
bases.
  
Stock-Based Compensation
  
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (Statement 123), but applies Accounting Principles Board
Opinion No. 25 (APB 25) and related interpretations in accounting for<PAGE>
1. Nature
of Business and Significant Accounting Policies (continued)
  
its plans. Under APB 25, when the exercise price of employee stock 
options equals the market price of the underlying stock on the 
date of grant, no compensation is recognized.
  
Use of Estimates
  
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
  
Net Loss Per Share
  
In 1997, the Company adopted Financial Accounting Standards Board
Statement No. 128, Earnings Per Share, which replaces the calculation of
primary and fully diluted earnings per share with basic and diluted earnings
per share. Basic earnings per share exclude the dilutive effect of options,
warrants and convertible securities, while diluted earnings per share include
such effects. All earnings per share amounts for all periods have been
presented to conform with Statement No. 128 requirements and are
unchanged from those previously reported. For all years presented, the
Company's basic and diluted loss per share are the same because the effects
of all options, warrants and convertible securities were antidilutive.
  
Reclassification
  
Certain prior year amounts have been reclassified to conform to the current
year presentation.
  
  <PAGE>
  2. Inventories
  
  Inventories consisted of the following:           1997        1996
  
  Purchased parts, materials and supplies         $328,000   $392,000
  Work in process                                   61,000    107,000
  Finished products                                211,000    264,000
  Less obsolescence reserve                        (79,000)   (35,000)
                                                  $521,000   $728,000
  
3. Debt
  
Short-term Notes Payable:
  
During 1997, the Company borrowed $510,000 through issuance of
subordinated convertible promissory notes payable and warrants to purchase
765,000 shares of common stock at $.50 per share. The notes payable bear
interest at a rate of 12%, payable at maturity on July 31, 1998. The notes
payable are convertible into common stock of the Company at 80% of the
quoted stock price on the date of conversion.
  
The beneficial conversion feature and the warrants were valued and recorded
as a discount to the notes payable which is being accreted as interest expense
over the term of the notes. Notes for $50,000 plus accrued interest were
converted into 107,150 shares during 1997. The carrying value of the notes at
December 31, 1997 was $364,000, net of a $96,000 discount.
  
During 1997 a portion of the proceeds raised from the issuance of the short-
term notes payable was used to repay a bank line of credit.
  
Factoring Agreement:

During 1997, the Company began factoring certain receivables under  an
agreement with a finance company with interest at the bank reference rate
plus 2.5% (11% at December 31, 1997), plus a monthly processing fee. The
Company remains liable for all receivables advanced until collection.
  
3. Debt (continued)
  
Lease Settlement Costs:
  
During 1993, the Company assumed lease guarantees for certain operations
sold in 1990 when the buyer filed bankruptcy. The settlement with lessors
was recorded at its present value of $125,000 using an 8% interest rate.
During 1997, the Company renegotiated the settlement agreement extending
the payment terms through 2001. Future settlement payments are as follows:
  
     1998                                    $12,000
     1999                                     32,000
     2000                                     32,000
     2001                                      4,000
     Total minimum settlement payments        80,000
     Less current portion                     12,000
     Long-term portion                       $68,000
  
  
The carrying amounts of the Company's debt instruments in the balance
sheets at December 31, 1997 and 1996 approximate their fair value.
  
4. Operating Leases
  
The Company has a non-cancelable operating lease agreement for a building
that expires in March 1999. Rental expense included in operations for this
lease for the years ended December 31, 1997 and 1996 totaled $133,134 and
$82,033, respectively. Future minimum rentals under the operating lease
agreement are as follows:
  
  
   Years ending:          
     1998                          $  90,000
     1999                             24,000
                                    $114,000
  
  
5. Shareholders' Equity
  
Preferred Stock
  
In March 1996, the Company converted the Hanrow Financial Group
$200,000 subordinated note into 200,000 shares of preferred stock. The
preferred stock is callable by the Company on April 5, 2000. The preferred
stock bears a coupon rate of 6% payable quarterly and is convertible into
common stock at $.46 per share. Dividends in arrears at December 31, 1997
were $9,000.
  
Common Stock
  
In 1996, the Company sold 3,501,000 units in a private placement of its
common stock, resulting in net proceeds to the Company of $3,046,000. Each
unit sold in the private placement consisted of one share of common stock
and one redeemable warrant. Each redeemable warrant entitles the holder to
purchase one share of common stock at $1.50 per share. The Company may
redeem the redeemable warrants at $.01 per share of common stock at any
time subsequent to 180 days after the issuance of the redeemable warrant if
the closing price of the Company's common stock is above $2.00 per share
for twenty consecutive days subsequent to the date the redeemable warrants
are first redeemable. The redeemable warrants expire in September 1999. In
connection with the private placement, the Company granted the selling agent
a warrant to purchase 350,100 shares of common stock at an exercise price of
$1.00 per share. The warrant expires five years after the date of grant.
  
6. Stock Options and Warrants
  
The Company's stock option plans authorize the granting of incentive and
non-qualified stock options. Incentive stock options may be granted to key
employees at prices equal to the fair market value at the date of grant. Non-
qualified stock options may be granted to employees, members of the Board
of Directors, consultants, and other persons who provide services to the
Company. Non-qualified options may be granted at prices not less than 85%
of the fair market value at the date of grant. Options granted generally vest
over a period of 48 months.
  
  <PAGE>
  6. Stock Options and Warrants (continued)
  
  A summary of outstanding options is as follows:
  
  
                                              Options
                                              Outstanding
                                 Shares       Weighted
                                 Reserved     Average       Price Per
                                 for Grant    Exercise      Share
  
  Balance, December 31, 1994     453,750      570,000      $  .39
  Granted                       (677,500)     677,500         .49
  Terminated                     179,250     (179,250)        .36
  Exercised                                    (1,250)        .27
  Increase in shares reserved 
    for grant                  1,000,000
  
  Balance, December 31, 1995     955,500    1,067,000         .46
  Granted                       (367,500)     367,500        1.32
  Terminated                     204,000     (204,000)        .55
  Canceled/expired                10,000      (10,000)        .88
  Increase in shares reserved 
    for grant                    500,000
   
  Balance, December 31, 1996   1,302,000    1,220,500         .70
  Granted                       (289,000)     289,000         .72
  Exercised                                  (153,125)        .41
  Canceled/expired               672,875     (672,875)        .92
  
  Balance, December 31, 1997   1,685,875      683,500      $  .56
  
  
  As of December 31, 1997 there were 392,500 options outstanding with
  exercise prices between $.30 and $.50, and 291,000 options outstanding with
  exercise prices between $.56 and $3.53. At December 31, 1997 outstanding
  options had a weighted-average remaining contractual life of 5 years.
  
  The number of options exercisable as of December 31, 1997 and 1996 were
  348,625 and 673,875, respectively, at weighted average exercise prices of
  $.51 and $.54 per share, respectively.
  
  The weighted average fair value of options granted during the years ended
  December 31, 1997 and 1996 was $.67 and $.92 per share, respectively.
6. Stock Options and Warrants (continued)
  
Pro Forma Disclosures
  
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of 
grant using a Black-Scholes option pricing model with the following weighted-
average assumptions for 1997 and 1996, respectively: risk-free interest rate 
of 5.5%; no dividend yield; volatility factor of the expected market price of 
the Company's common stock of 1.633% and .846%; and a weighted-average
expected life of the option of 5 years and 4 years.
  
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its 
employee stock options.
  
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
     
                                                1997             1996
Pro forma loss applicable to common shares $(1,996,000) $(1,483,000)
Pro forma loss per common share - basic and
     diluted                                       $(.20)       $(.24)
  
 
Note: the pro forma effect on the net loss for 1997 and 1996 is not
representative of the pro forma effect on net income (loss) in the future years
because it does not take into consideration pro forma compensation expense
related to option grants made prior to 1995.
  
6. Stock Options and Warrants (continued)
  
Warrants
The Company has granted warrants for the purchase of shares of the
Company s common stock to directors and certain debt and equity holders.
With the exception of warrants granted to the President of the Company, the
warrants are fully vested upon issuance and expire in varying amounts
through 2007. Information with respect to warrants granted as of December
31, 1997 and 1996 is summarized as follows:
  
  
  
  
                                      Shares             Warrant Price 
                                                         Per Share

Outstanding at December 31, 1995   1,293,070             $.30 to $1.00
Granted                            4,143,335              .88 to  1.88
Canceled
Exercised                           (231,500)             .38 to   .50
Outstanding at December 31, 1996   5,204,905              .30 to  1.88
Granted                            3,772,403              .47 to  1.94
Canceled                            (104,353)             .375
Exercised                           (210,647)             .29 to   .69
Outstanding at December 31, 1997   8,662,308              .29 to  1.94
  
  
7. Income Taxes
  
Deferred tax assets and liabilities consisted of the following:
     
                                                   1997       1996
Net operating loss carryforwards            $ 3,619,000  $ 3,708,000
Tax credit carryforwards                                     130,000
Inventory                                        36,000       14,000
Other                                            76,000       51,000
Deferred tax assets                           3,731,000    3,903,000
Depreciation                                     62,000       73,000
Deferred tax liability                           62,000       73,000
                                                3,669,000    3,830,000
  
Less valuation allowance                     (3,669,000)  (3,830,000)
  
Net deferred tax assets                     $  0         $  0              
  
7. Income Taxes (continued)
  
The Company has net operating loss carryforwards at December 31, 1997 of
approximately $10,644,000, which are available to reduce income taxes
payable in future years. These carryforwards will expire at various times
through the year 2012.
  
The annual usage of the Company's net operating loss carryforwards may be
limited by provisions of the Tax Reform Act of 1986 ("TRA"). Under TRA,
if a company experiences a change in ownership of more than 50% (by value)
of its outstanding stock over a three year period, the use of its pre-change 
in ownership net operating loss carryforwards may be limited each year until 
the loss is exhausted or the carryover period expires.
  
Income tax expense for the current year relates to state taxes.
  
8. Retirement Plan
 
The Company has a Retirement Savings Plan for its employees which allows
participants to make contributions by salary reduction pursuant to section
401(k) of the Internal Revenue Code. The Company may match up to 25% of
the employees  contributions to a maximum of 3% of the employee's annual
salary. Employees vest immediately in their contribution and vest in the
Company s contribution after one year of service. The Company's
contribution to the plan in 1996 was 3,961 shares of common stock, with fair
market value of approximately $8,000, at the date of contribution. There were
no contributions to the Plan during 1997. Future matching contributions will
be determined annually by the Board of Directors.
  
9. Major Customers
  
For the year ended December 31, 1997, the Company had net sales to two
customers which totaled 37% of the total net sales for the year. The
receivable balance due from these customers was $259,900 at December 31,
1997.
  
10. Supplemental Cash Flow Information
 
The Company made interest payments of $61,000 and $104,000 for the years
ended December 31, 1997 and 1996, respectively.
  
11. Related Party Transaction
  
In July 1997 the Company issued a warrant to its president for the purchase
of 2,892,403 shares of common stock at $.47 per share. The warrant vests in
equal parts on January 2, 1998, July 2, 1998 and July 2, 1999 assuming
continued employment. The exercise dates can be accelerated if the Company
meets certain performance benchmarks. 
  
  12. Going Concern
  
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal 
course of business. The Company has experienced operating losses in each of 
fiscal years 1994 through 1997, depleting most of its available capital. The
Company is dependent on future financing activities to continue as a going
concern. Management is evaluating financing alternatives; however, there can
be no assurance that the Company will be successful in obtaining financing on
terms favorable to the Company.
  
<PAGE>
CORPORATE DATA

OFFICERS:

S. Albert D. Hanser
Chairman 

Ronald B. Thomas
President, Secretary and Treasurer

Sarah B. Fjelstul
Assistant Secretary

DIRECTORS:

Ronald B. Thomas

S. Albert D. Hanser

Dennis E. Evans
President and Chief Executive Officer, Hanrow Financial Group, Ltd.

Douglas M. Pihl
Special Technical Adviser to Ascend Communications, Inc.

Roger V. Stageberg
Attorney at Law, Lommen, Nelson, Cole & Stageberg, P.A.

SHAREHOLDER INFORMATION

AUDITORS

Ernst & Young LLP
1400 Pillsbury Center
Minneapolis, MN 55402

LEGAL COUNSEL

Lommen, Nelson, Cole & Stageberg, P.A.
1800 IDS Center
80 South Eighth Street
Minneapolis, MN 55402

REGISTRAR/TRANSFER AGENT

Norwest Stock Transfer
161 N. Concord Exchange
South St. Paul, MN 55075

FACILITY

Corporate Office
2700 Summer Street NE
Minneapolis, MN 55413

ANNUAL MEETING

The annual meeting of Astrocom shareholders will be held at 3:00 p.m. May 28, 
1998 at Minneapolis Club, 729 Second Avenue South, Minneapolis, 
Minnesota.  Shareholders and other interested parties are encouraged to 
attend.

FORM 10-KSB

A copy of the annual report filed with the Securities and Exchange Commission 
of Form 10-KSB is available to shareholders, without charge, upon written 
request to Sarah B. Fjelstul, Astrocom Corporation, 2700 Summer Street N.E., 
Minneapolis, Minnesota 55413.

MARKET AND DIVIDEND DATA:

The Common Stock of Astrocom Corporation was traded during 1997 on the 
over-the-counter Bulletin Board under the symbol ATCC.  The high and low 
selling prices for the Common Stock were as follows:


                              1997                1996
                         High     Low        High     Low

First Quarter          3 13/16   1 5/8   1 1/8    1/4
Second Quarter          2 1/8      5/8       1 3/8    3/4
Third Quarter           1 5/8      3/8       1 3/4    7/8
Fourth Quarter          1 1/16    11/32      2      1 3/8

The Company has never paid a cash dividend and is restricted from paying 
dividends pursuant to a subordinated debt agreement dated April 5, 1991.  The 
Company intends to retain any earnings to finance the development of its 
business and, accordingly, does not anticipate payment of a cash dividend in 
the foreseeable future.

On March 13, 1998 the Company had approximately 723 shareholders of record.

<PAGE>
                        Exhibit 23

              Consent of Independent Auditors



We consent to the incorporation by reference in the Registration Statement 
(Form S-8 No. 33-299184) pertaining to the 1988 Incentive Stock Option Plan 
of Astrocom Corporation of our report dated February 27, 1998, with respect 
to the financial statements of Astrocom Corporation incorporated by reference 
in the Annual Report on Form 10-KSB of Astrocom Corporation for the year ended 
December 31, 1997.


s/Ernst & Young LLP
Ernst & Young LLP

Minneapolis, Minnesota
March 31, 1998