Quarterly Report 12-31-1997
 
                     U.S. Securities and Exchange Commission
                            Washington, D.C. 20549
                                Form 10-QSB

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

For the quarterly period ended December 31, 1997

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

For the transition period from ...............to...............

Commission file number 0-23710

                          Micro-Integration Corp.
     (Exact name of small business issuer as specified in its charter)

             Delaware                                    06-1204847
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                Identification Number)

          One Science Park
          Frostburg, MD                                   21532
(Address of principal executive offices)                (Zip Code)

Issuer's telephone number: 301-689-0800

     Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 
such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90 days.  
Yes ......X.......  No ...........

The number of shares outstanding of the issuer's classes of common stock as 
of December 31, 1997:

Common Stock, $.01 Par Value --- 2,517,811 shares

Transitional Small Business Disclosure Format (check one):  
Yes ............  No ......X......


<PAGE>
                Micro-Integration Corp. and Subsidiaries
                               Form 10-QSB
                                  Index



Part I    Financial Information                                 Page
-------------------------------                                 ----

Item 1.    Consolidated Balance Sheets                            2
           Consolidated Statements of Operations                  4
           Consolidated Statements of Cash Flows                  5
           Notes to Unaudited Condensed Consolidated
               Financial Statements                               6

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


Part II    Other Information
----------------------------

Item 1.    Legal Proceedings                                     10

Item 2.    Changes in Securities and Use of Proceeds             10

Item 3.    Defaults Upon Senior Securities                       10

Item 4.    Submission of Matters to a Vote of Security Holders   10

Item 5.    Other Information                                     10

Item 6.    Exhibits and Reports on Form 8-K                      10


Signatures                                                       11
----------

<PAGE>
Part I   Financial Information
Item 1.  Financial Statements

                    Micro-Integration Corp. and Subsidiaries
                         Consolidated Balance Sheets

                                              December 31      March 31
                                                 1997            1997
                                           --------------   -------------
                                             (unaudited)      
ASSETS                     
                     
Current Assets                     
   Cash                                      $    299,042      $  370,598 
   Marketable securities, available-for-sale      100,000         100,000 
   Receivables                  
      Trade, net of allowance for doubtful               
         accounts $43,197 and $76,324           1,636,568       1,872,291 
      Note                                           -             70,000 
      Tax refund                                    3,158          46,141 
   Inventory                                      589,753         596,556 
   Prepaid expense                                111,411          97,576 
                                           --------------    ------------
                     
      Total Current Assets                      2,739,932       3,153,162 
                     
                     
Property, Plant, and Equipment                     
   Land                                            92,962          92,962 
   Buildings                                    1,457,558       1,455,518 
   Equipment                                    1,451,034       1,384,231 
   Automobiles                                    102,952          83,952 
   Property held for sale                          57,939          58,794 
                                           --------------   -------------
                                                3,162,445       3,075,457 
   Less accumulated depreciation               (1,251,855)     (1,041,637)
                                           --------------   -------------
                                                1,910,590       2,033,820 
                     
Cash Surrender Value of Life Insurance                     
   and Other Noncurrent Assets, Net               307,465         298,437 
                     
                     
Intangible Assets, Net of Amortization            869,859         745,912 
                                           --------------   -------------
                     
                                            $   5,827,846   $   6,231,331 
                                            =============   ============= 

<PAGE>
                 Micro-Integration Corp. and Subsidiaries
                       Consolidated Balance Sheets


                                               December 31      March 31
                                                  1997            1997
                                            --------------   -------------
                                             (unaudited)      
LIABILITIES AND SHAREHOLDER'S EQUITY                  
                  
Current Liabilities                  
   Demand notes payable                     $      388,615   $     462,500 
   Current portion of long-term debt and               
      capital lease obligations                    154,998         196,181 
   Accounts payable                                743,470         933,434 
   Accrued expenses                                115,562         471,137 
   Income tax payable                                4,253           1,800 
                                            --------------   -------------

      Total Current Liabilities                  1,406,898       2,065,052 
                                            --------------   -------------
                  
Long-Term Liabilities                  
   Debt, less current portion                    1,183,106       1,210,139 
                  
                  
Shareholders' Equity                   
   Preferred stock - $.01 par value: authorized               
      4,000,000 shares; none issued as of            
      December 31, 1997 and March 31, 1997            -               -   
   Common stock - $.01 par value; authorized               
      12,000,000 shares; issued 2,667,349 and            
      2,641,477 as of December 31, 1997             
      and March 31, 1997, respectively              26,674          26,415 
   Additional capital                            5,683,038       5,603,263 
   Retained deficit                             (2,090,976)     (2,292,644)
                                            --------------   -------------   
                                            
                                                 3,618,736       3,337,034 
   Less treasury stock                             380,894         380,894 
                                            --------------   ------------- 
                   
                                                 3,237,842       2,956,140 
                                            --------------   -------------
                  
                                             $   5,827,846   $   6,231,331 
                                            ==============   =============

See Notes to Unaudited Condensed Consolidated Financial Statements.    


<PAGE>
                 Micro-Integration Corp. and Subsidiaries
                  Consolidated Statements of Operations
<TABLE>
<CAPTION>
                              Three months ended December 31         Nine months ended December 31
                                  1997           1996                    1997             1996          
                              -----------      -----------             -----------     ---------- 
                                     (unaudited)                             (unaudited)      
<S>                           <C>              <C>                     <C>             <C>   
REVENUE                   
   License revenue            $    93,549      $    75,857             $   123,404     $   153,463 
   Product revenue              2,865,428        2,441,322               9,196,350       5,498,175 
                              -----------      -----------             -----------     -----------
     Total Revenue              2,958,977        2,517,179               9,319,754       5,651,638 
                
   Cost of goods sold           1,795,958        1,378,031               5,902,840       2,507,021 
                              -----------      -----------             -----------     -----------
      Gross Profit              1,163,019        1,139,148               3,416,914       3,144,617 
                
Operating Expenses                
   Selling, general, and             
      administrative            1,046,302        1,226,140               3,112,202       3,585,988 
   Depreciation and             
      amortization expense         70,370          127,072                 228,948         335,498 
                              -----------      -----------             -----------     ----------- 
                                1,116,672        1,353,212               3,341,150       3,921,486 
                
      Operating Income (Loss)      46,347         (214,064)                 75,764        (776,869)
                
Other Income (Expense)                
   Interest expense               (35,662)         (28,470)               (105,546)        (82,620)
   Gain on sale of residential              
      internet business            57,720             -                    193,557             - 
   Other income                    16,714           21,162                  42,658          72,607 
                              -----------      -----------             -----------     -----------
                                   38,772           (7,308)                130,669         (10,013)
                              -----------      -----------             -----------     -----------          

      Income (Loss) before          
         Income Taxes              85,119         (221,372)                206,433        (786,882)
                
      Income tax expense             (623)          22,563                   4,766          31,955 
                              -----------      -----------             -----------     -----------

         Net Income (Loss)    $    85,742      $  (243,935)            $   201,667     $  (818,837)
                              ===========      ===========             ===========     ===========

Basic and Diluted                
   Earnings (Loss) per Share  $      0.03      $     (0.10)            $      0.08     $     (0.34)
                              ===========      ===========             ===========     ===========

Weighted Average Number of                
   Common Shares Outstanding    2,502,922        2,457,240               2,496,023       2,415,813 
                              ===========      ===========             ===========     ===========
                
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.  


<PAGE>
                Micro-Integration Corp. and Subsidiaries
                 Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                Nine months ended December 31
                                                                      1997               1996      
                                                             -------------      -------------
                                                                         (unaudited)
<S>                                                          <C>                <C>
Cash Flows from Operating Activities   
Net income (loss)                                            $     201,667      $    (818,837)
Adjustments to reconcile net income (loss) to
   net cash (used in) provided by operating activities:
   Depreciation and amortization                                   228,948            441,989 
Change in operating assets and liabilities:
   Accounts receivable                                             (27,397)           168,767 
   Note receivable                                                  70,000                  - 
   Tax refund receivable                                            42,983            (64,751)
   Inventory                                                         6,803            241,826 
   Prepaid expense                                                 (13,835)           (63,720)
   Accounts payable                                               (189,964)           106,362 
   Accrued expenses                                               (355,575)           (11,690)
   Income taxes payable                                              2,453             20,748  
                                                             -------------      -------------
Net cash (used in) provided by operating activities                (33,917)            20,694 

Cash Flows from Investing Activities
   Acquisition of property, plant, and equipment                   (90,382)          (300,697)
   Investment on organization of subsidiary                              -           (161,874)
   Increase in other noncurrent assets                            (141,164)          (192,483)
   Purchase of available-for-sale securities                             -          7,400,000 
   Proceeds from maturity of available-for-sale securities               -         (6,800,000)
   Increase in cash surrender value of life insurance               (9,028)            (6,578)
   Proceeds from sale of residential internet business             263,120                  - 
   Proceeds from sale of fixed assets                                2,968             14,886 
   Loss (gain) on sale of fixed assets                              (1,086)             5,214 
                                                             -------------      -------------
Net cash provided by (used in) investing activities                 24,428            (41,532)

Cash Flows from Financing Activities:
   Repayments of notes payable, long-term debt, and
      capital lease obligations                                    (68,216)           171,033 
   Net repayment of short-term debt                                (73,885)                 - 
   Issuance of common stock                                         80,034            199,592 
                                                             -------------      -------------
Net cash (used in) provided by financing activities                (62,067)           370,625 

Currency Adjustments:
   Effect of exchange rate changes on cash                               -            (19,374)
                                                             -------------      -------------
   Decrease in cash                                                (71,556)           330,413 
   Cash at beginning of period                                     370,598            460,874 
   Cash at end of period                                     $     299,042      $     791,287 
                                                             =============      =============  
 
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.


<PAGE>
                     Micro-Integration Corp. and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements

1.     Basis of Presentation

The accompanying unaudited consolidated financial statements have been 
prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-QSB and 
article 10 of Regulation S-X.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting principles 
for complete financial statements.  In the opinion of management, all 
adjustments, consisting only of normal recurring adjustments, necessary for a 
fair presentation have been included.  The results for the three and nine 
months ended December 31, 1997, and 1996, are not necessarily indicative of 
financial information for the full year.  The unaudited condensed consolidated 
financial statements should be read in conjunction with the consolidated 
financial statements and footnotes thereto included in the Company's annual 
report and Form 10-KSB for the year ended March 31, 1997.

For purposes of comparability, certain prior year amounts in the consolidated 
financial statements have been reclassified to conform to the presentation 
used for current period reporting.


2.     Marketable Securities

Available-for-sale securities are stated at fair value, with the unrealized 
gains and losses, net of tax, reported as a separate component of 
shareholders' equity.  Realized gains and losses and declines in value judged 
to be other- than-temporary on available-for-sale securities are included in 
investment income.  The cost of securities sold is based on the specific 
identification method.  Interest on securities classified as available-for-
sale is included in investment income.  Available-for-sale securities include 
obligations of state municipalities and are stated at fair market value of 
$100,000 at December 31, 1997, and March 31, 1997.  These securities mature 
in August 2026.  There were no unrealized gains/losses with respect to these 
securities during the periods ended December 31, 1997, nor 1996.


3.     Inventory

Inventory consisted of the following:

                                    December 31              March 31
                                        1997                   1997
                                    ----------             ----------
                  Raw material      $  156,759             $  129,766          
                  Finished goods       432,994                466,790
                                    ----------             ----------
                                    $  589,753             $  596,556
                                    ==========             ==========  

Inventory is stated at the lower of cost or market.  Cost is determined 
using the first-in, first-out method.


4.     Earnings per Share

The following table sets forth the computation of basic and diluted earnings 
(loss) per share:

<TABLE>
<CAPTION>
                                              Three months ended December 31     Nine months ended December 31
                                                 1997              1996             1997             1996
                                              ------------     ------------      ------------     ------------
                                                       (unaudited)                           (unaudited)
<S>                                           <C>              <C>               <C>              <C>
Numerator:                
   Net income (loss)                          $    85,742      $  (243,935)      $   201,667      $  (818,837)

   Numerator for basic earnings (loss)
      per share - income available
      to common stockholders                      85,742          (243,935)          201,667         (818,837)

   Numerator for diluted earnings (loss)
      per share - income available to
      common stockholders after
      assumed conversions                     $   85,742       $  (243,935)      $   201,667      $  (818,837)

Denominator:
   Denominator for basic earnings per
      share - weighted-average shares          2,502,922         2,457,240         2,496,023        2,415,813

   Effect of dilutive securities:
      Employee stock options                       2,366             9,194               791           17,746
                                             -----------       ------------      ------------     ------------
   Denominator for diluted earnings per
      share - adjusted weighted-average
      shares and assumed conversions           2,505,288         2,466,434         2,496,814        2,433,599
                                             ===========       ============      ============     ============

Basic earnings (loss) per share              $      0.03       $     (0.10)      $      0.08      $     (0.34)
                                             ===========       ============      ============     ============

Diluted earnings (loss) per share            $      0.03       $     (0.10)      $      0.08      $     (0.34)

                                             ===========       ============      ============     ============

</TABLE>
<PAGE>
                        
Part I   Financial Information
Item 2.  Management's Discussion and Analysis of Results of Operations and 
         Financial Condition for the Nine Months Ended December 31, 1997, and 
         1996

The statements under Management's Discussion and Analysis of Results of 
Operations and Financial Condition and other statements in this Form 10-QSB 
which are not historical facts are forward-looking statements as that term is 
defined by the Private Securities Litigation Reform Act of 1996.  When used in 
this discussion and elsewhere in this Form 10-QSB, the words "estimate," 
"expect," "intend," and "project," as well as other words or expressions of 
similar meaning are intended to identify such forward-looking statements.  
Such statements are based on current expectations, are inherently uncertain, 
are subject to risks and should be viewed with caution.  Actual results and 
experience may differ materially from forward-looking statements as a result 
of many factors, including, but not limited to:  changes in economic 
conditions in the various markets served by the Company's operations; 
increased competitive activity; availability, costs and obsolescense of 
inventory; employee turnover and labor costs; the rate of technology change; 
failure to provide new and innovative products; the effect of regulatory and 
legal developments and other unanticipated events and conditions.  Readers 
are cautioned not to place undue reliance on forward-looking statements, 
which speak only as of the date of this quarterly report.  The Company makes 
no commitment to update any forward-looking statement, or to disclose any 
facts, events or circumstances after the date hereof that may affect the 
accuracy of any forward-looking statement.


Results of Operations

On December 1, 1997, the Company completed the purchase of SuiteOne Computer 
Services, Inc., a Pennsylvania-based UNIX services company.  In its last 
fiscal year, ended December 31, 1996, SuiteOne generated revenues of $454,000. 
Because its results are included for only one month, SuiteOne's contribution 
to Company revenues in the quarter ended December 31, 1997, was immaterial.  
The Company expects SuiteOne to make a contribution proportionate to its 1996 
revenues toward the Company's revenues in the remaining quarter of this fiscal 
year, ending March 31, 1998.

The Company's total revenue was $3.0 million for the quarter ended December 
31, 1997, an increase of 18% or $442,000 from the quarter ended December 31, 
1996.  Product and service revenue increased $424,000 or 17% while license 
revenue increased $18,000 or 23% compared to the same period last year.

For the nine months ended December 31, 1997, total revenue was $9.3 million, 
up 65% or $3.7 million from the same period last year.  Product and service 
revenue increased by $3.7 million or 67%, and license revenue declined, as 
expected, by $30,000 or 20% compared to the same period last year.  As in the 
previous quarter, there were unit and revenue declines in the Company's AS/400 
connectivity product sales but these declines were not as steep as they have 
been in the recent past.  The Company believes, as stated previously, that 
this decline in unit sales is primarily a result of a slowdown in purchases 
of connectivity products in the IBM AS/400 marketplace, and that this decline 
will continue.  These declines were offset by increased revenues from sales 
by the Company's systems integration and consulting businesses primarily 
through the Company's Computer One and Computer Site subsidiaries.  The 
Company's Computer One and Computer Site subsidiaries jointly accounted for 
65% of the Company's total revenue for the nine month period ending December 
31, 1997.

<PAGE>

Gross margin declined to 39.3% for the quarter ended December 31, 1997, from 
45.3% in the same period in 1996.  Gross margin declined to 36.7% for the 
nine months ended December 31, 1997, from 55.6% in the same period in 1996.  
The major contributing factor to these declines is the change in product mix 
from high-margin AS/400 connectivity products, where unit volumes are 
declining, to lower-margin products and consulting services.   The Company 
expects gross margins to continue to decline in the short term, as computer 
and network equipment and consulting services continue to become a larger 
proportion of the product mix.

Selling, general, and administrative (SG&A) expenses decreased by $180,000 
in the quarter ended December 31, 1997, compared to the same period in 1996.  
As a percentage of sales, SG&A expenses were 35.4% of total sales in the 
current quarter compared with 48.7% of total sales in the same quarter last 
year.  For the nine months ended December 31, 1997, SG&A expenses decreased 
by $474,000 compared to the same period in 1996.  As a percentage of sales, 
SG&A expenses represented 33.4% of total sales for the nine months compared 
with 63.5% for the same period last year.  The decrease in SG&A expenses is 
primarily attributable to a reduction of 26% in the number of employees from 
88 in December 1996 to 65 in December 1997.  Management continues to control 
costs in an attempt to keep them below expected gross margins.

The Company's net other income was $39,000 for the three months ended 
December 31, 1997, compared to $7,000 net other expense in the same quarter 
last year.  For the nine months ended December 31, 1997, the Company had net 
other income of $131,000 compared to a net other expense of $10,000 in the 
same period last year.  The quarterly and year-to-date net other income 
amounts include a $58,000 and $136,000 one-time gain on the sale of the 
Company's residential internet dial-up business, respectively.  Had the 
Company not had the one-time gain from the sale of its residential internet 
dial-up business, net other loss would have been $19,000 and $63,000 for the 
three and nine month periods ended December 31, 1997.

For the nine months ended December 31, 1997, the Company recognized a 
corporate tax expense of $5,000.  At December 31, 1997, the Company had a net 
operating loss carryforward of approximately $2.3 million available for offset 
against future operating profits.


Liquidity and Capital Resources

The Company satisfies its cash requirements primarily through cash flow from 
operations, bank borrowings, and lease financing.  At December 31, 1997, the 
Company had $100,000 invested in available-for-sale securities and an 
additional $299,000 in cash.  The $72,000 decrease in cash on hand at 
December 31, 1997, compared with cash on hand at March 31, 1997, is primarily 
due to an increase of $24,000 in cash provided by investing activities offset 
by decreases of $34,000 and $62,000 in cash resulting from operating and 
financing activities, respectively.  Investing activities included 
capitalization of software development costs associated with the Company's 
new Internet voice/fax server product currently in development.

At December 31, 1997, the Company had two working capital credit lines with 
U.S. banks.  One credit line, which is secured by a deposit from the Company, 
had an outstanding balance of $100,000.  The second line had a balance of 
$272,000 outstanding of $300,000 available. The terms of this line of credit 
are currently under negotiation.  The Company expects that cash generated 
from operations will satisfy its operating cash needs for the foreseeable 
future.

Working capital increased to $1.3 million as of December 31, 1997, from $1.1 
at March 31, 1997.  The Company's current ratio showed improvement from 1.53 
to 1 at March 31, 1997, to 1.95 to 1 at December 31, 1997.  At the end of the 
December 1997 period, the Company's book value was $3.2 million or 
approximately $1.30 per weighted average share outstanding.

<PAGE>
Part II     Other Information

Item 1.     Legal Proceedings

            None.

Item 2.     Changes in Securities and Use of Proceeds

            None.

Item 3.     Defaults Upon Senior Securities

            None.

Item 4.     Submission of Matters to a Vote of Security Holders

            None.

Item 5.     Other Information
 
            None.

Item 6.     Exhibits and Reports on Form 8-K

            (a)   Exhibits

                  27.1   Financial Data Schedule

            (b)   During the three months ended December 31, 1997, the 
                  Company filed a Form 8-K dated December 4, 1997, reporting 
                  that trading of the Company's shares moved from the Nasdaq 
                  National Market to The Nasdaq SmallCap Market under Item 5, 
                  "Other Events."
<PAGE>
 

                                  SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized in the city of Frostburg, state of 
Maryland, on the 17th day of February, 1998:

Micro-Integration Corp.

By:    /s/           John A. Parsons             
    -------------------------------------------
                     John A. Parsons
             President, Chairman of the Board,
                  Chief Executive Officer



By:      /s/         Terry D. Frost             
    -------------------------------------------
                     Terry D. Frost
                 Chief Financial Officer