SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                    For the Quarter Ended September 26, 1998

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 0-20666

                                 MICROTEST, INC.
                                 ---------------
             (Exact name of registrant as specified in its charter)

          DELAWARE                                               86-0485884
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               identification no.)

                   4747 N. 22ND STREET, PHOENIX, ARIZONA 85016
                   -------------------------------------------
              (Address of principal executive offices and Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 952-6400
       ------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]

As of November 2, 1998,  8,253,585 shares of the registrant's  common stock were
outstanding.

                         THIS DOCUMENT CONTAINS 17 PAGES
                         -------------------------------
<PAGE>
                                      INDEX
                                      -----

                                 MICROTEST, INC.

                                                                            Page

Facing Page                                                                    1

Index                                                                          2
                                                                         
PART I. FINANCIAL INFORMATION                                            
-----------------------------                                            
                                                                         
Item 1 - Financial Statements (Unaudited)                                
                                                                         
         Condensed Consolidated Balance Sheets                                 3
                                                                         
         Condensed Consolidated Statements of Income                           4
                                                                         
         Condensed Consolidated Statements of Cash Flows                       5
                                                                         
         Notes to Unaudited Condensed Consolidated Financial Statements      6-8
                                                                         
Item 2 - Management's Discussion and Analysis of Financial               
         Conditions and Results of Operations                               9-12
                                                                         
PART II. OTHER INFORMATION                                               
--------------------------                                               
                                                                         
Item 1 - Legal Proceedings                                                    12
                                                                         
Item 2 - Changes in Securities                                                12
                                                                         
Item 3 - Defaults Upon Senior Securities                                      12
                                                                         
Item 4 - Submission of Matters to a Vote of Security Holders               12-13
                                                                         
Item 5 - Other Information                                                    13
                                                                         
Item 6 - Exhibits and Reports on Form 8-K                                     13
                                                                         
Signatures                                                                    14
                                                                         
Exhibit 99 - Private Securities Litigation Reform Act of 1995 Safe       
         Harbor Compliance Statement for Forward-Looking Statements        15-16
                                                                        

                                       2
<PAGE>
PART I.  FINANCIAL STATEMENTS

                                 MICROTEST, INC.
                      Condensed Consolidated Balance Sheets
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                        September 26,        December 31,
                                                                       1998 (unaudited)          1997
                                                                       ----------------    ----------------
<S>                                                                    <C>                 <C>             
                                                  ASSETS
CURRENT ASSETS:

      Cash and cash equivalents                                        $         13,062    $         11,547
      Accounts receivable - less allowance for doubtful
         accounts of $669 and $892, respectively and less
         returns reserve of $868 and $1,073, respectively                         8,272              12,083
      Inventories - less reserve for obsolescence of $470
         and $694, respectively                                                   6,130               5,924
      Prepaid expenses                                                            2,054               1,459
      Income taxes receivable                                                     2,049               2,258
      Deferred income taxes                                                       2,216               2,216
                                                                       ----------------    ----------------
           Total current assets                                                  33,783              35,487

PROPERTY, PLANT AND EQUIPMENT - less accumulated
      depreciation of $7,169 and $6,200, respectively                             3,533               3,543

INTANGIBLES AND OTHER ASSETS                                                      3,679               2,777

DEFERRED INCOME TAXES                                                               133                 133
                                                                       ----------------    ----------------

TOTAL                                                                  $         41,128    $         41,940
                                                                       ================    ================

                                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
      Accounts payable                                                 $          4,120    $          4,699
      Accrued liabilities                                                         3,466               4,130
      Accrued payroll and employee benefits                                       1,164               1,017
                                                                       ----------------    ----------------
           Total liabilities                                                      8,750               9,846

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
      Common stock, $.001 par value - authorized, 15,000,000 shares;
         issued 8,244,237 and 8,193,320 shares, respectively                          8                   8
      Additional paid-in capital                                                 32,941              32,710
      Retained earnings/(deficit)                                                   606                (186)
      Common stock in treasury at cost - 225,020, and 34,196,
         respectively                                                            (1,177)               (438)
                                                                       ----------------    ----------------
           Total stockholders' equity                                            32,378              32,094
                                                                       ----------------    ----------------

TOTAL                                                                  $         41,128    $         41,940
                                                                       ================    ================
</TABLE>

See notes to condensed consolidated financial statements

                                       3
<PAGE>
                                 MICROTEST, INC.
             Condensed Consolidated Statements of Income (unaudited)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                              Three Months Ended               Nine Months Ended
                                        ------------------------------   -----------------------------
                                        September 26,    September 27,   September 26,   September 27,
                                            1998             1997            1998            1997
                                        -------------    -------------   -------------   -------------
<S>                                     <C>              <C>             <C>             <C>          
TOTAL REVENUES                          $      10,111    $      12,391   $      30,951   $      35,450

TOTAL COST OF SALES                             4,090            5,335          12,316          14,686
                                        -------------    -------------   -------------   -------------

GROSS PROFIT                                    6,021            7,056          18,635          20,764

OPERATING EXPENSES:
       Sales and marketing                      2,655            3,695           8,860          12,490
       Research and development                 1,698            1,847           5,210           6,067
       General and administrative               1,403              978           3,513           3,124
                                        -------------    -------------   -------------   -------------

            Total operating expenses            5,756            6,520          17,583          21,681

INCOME/(LOSS) FROM OPERATIONS                     265              536           1,052            (917)

INVESTMENT INCOME                                  81                1             258             212
                                        -------------    -------------   -------------   -------------

INCOME/(LOSS) BEFORE INCOME TAXES                 346              537           1,310            (705)

INCOME TAX PROVISION/(BENEFIT)                    (47)             205             205            (184)
                                        -------------    -------------   -------------   -------------

NET INCOME/(LOSS)                       $         393    $         332   $       1,105   $        (521)
                                        =============    =============   =============   =============

BASIC EARNINGS PER SHARE:
       NET INCOME/(LOSS) PER SHARE      $        0.05    $        0.04   $        0.14   $       (0.06)
                                        =============    =============   =============   =============
       WEIGHTED AVERAGE COMMON SHARES
       OUTSTANDING                              8,068            8,157           8,132           8,168
                                        =============    =============   =============   =============

DILUTED EARNINGS PER SHARE:
       NET INCOME/(LOSS) PER SHARE      $        0.05    $        0.04   $        0.14   $       (0.06)
                                        =============    =============   =============   =============
       WEIGHTED AVERAGE COMMON AND
       EQUIVALENT SHARES OUTSTANDING            8,068            8,297           8,132           8,257
                                        =============    =============   =============   =============
</TABLE>

See notes to condensed consolidated financial statements

                                       4
<PAGE>
                                 MICROTEST, INC.
           Condensed Consolidated Statements of Cash Flows (unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                ------------------------------
                                                                September 26,    September 27,
                                                                     1998             1997
                                                                -------------    -------------
<S>                                                             <C>              <C>           
OPERATING ACTIVITIES:
       Net income/(loss)                                        $       1,105    $        (521)
       Adjustments to reconcile net income/(loss) to net cash
          provided by/(used in) operating activities:
            Depreciation and amortization                                 897            1,491
            Changes in operating assets and liabilities:
              Accounts receivable                                       3,811            3,964
              Inventories                                                (206)            (773)
              Prepaid expenses and other assets                        (1,425)          (1,139)
              Accounts payable                                           (579)          (2,552)
              Accrued liabilities                                        (664)          (1,982)
              Accrued payroll and employee benefits                       147             (146)
              Income taxes receivable                                     209             (504)
                                                                -------------    -------------

Net cash provided by/(used in) operating activities                     3,295           (2,162)

INVESTING ACTIVITIES:
       Purchases of equipment and leasehold improvements                 (959)            (570)
                                                                -------------    -------------

Net cash used in investing activities                                    (959)            (570)

FINANCING ACTIVITIES:
       Purchase of treasury stock                                      (1,177)            --
       Proceeds from sale of common stock and treasury stock              356              151
                                                                -------------    -------------

Net cash (used in)/provided by financing activities                      (821)             151
                                                                -------------    -------------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                        1,515           (2,581)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         11,547           10,282
                                                                -------------    -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                        $      13,062    $       7,701
                                                                =============    =============
</TABLE>

See notes to condensed consolidated financial statements

                                       5
<PAGE>
                                 MICROTEST, INC.
                               NOTES TO UNAUDITED
                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and the  instructions  to Form  10-Q and  Rule  10-01 of
Registration  S-X.  Accordingly,  they do not include all of the information and
notes  required  by  generally  accepted  accounting   principles  for  complete
financial  statements.  In  the  opinion  of  management,  all  adjustments  and
reclassifications  considered  necessary for a fair and comparable  presentation
have been included and are of a normal recurring  nature.  Operating results for
the  three  months  and the  nine  months  ended  September  26,  1998,  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31,  1998.  The  accompanying  financial  statements  should be read in
conjunction with the Company's most recent Annual Report and Form 10-K.

1.   BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

     A.   PRINCIPLES OF  CONSOLIDATION - The consolidated  financial  statements
          include  the  accounts  of  Microtest,   Inc.  and  its   wholly-owned
          subsidiaries  (collectively,  the  "Company").  The Company  develops,
          markets,  and  supports  products  that  make it  easier  to  install,
          service, and manage local area networks ("LANs").

     B.   For interim reporting  purposes,  the Company ends its quarters on the
          Saturday  closest to the calendar quarter end, with the fourth quarter
          ending on December 31, 1998.

2.   COMMITMENTS AND CONTINGENCIES

     Future minimum  rental  payments due under the Company's  office  operating
     leases are as follows: 

                                                      (Amounts in
                                                       Thousands)

     1998                                             $       276
     1999                                                   1,164
     2000                                                     897
     2001                                                     144
                                                      -----------
     Total minimum rental payments                    $     2,481
                                                      ===========

     The  Company is involved in certain  other  legal  matters,  the outcome of
     which  is  currently  unknown.   Management  believes  that  the  Company's
     liability, if any, will not have a material adverse effect on the Company's
     financial condition and results of operations.

                                       6
<PAGE>
3.   EARNINGS PER SHARE

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     128,  Earnings Per Share,  the following  presents the computation of basic
     and diluted earnings per share:

                            Basic Earnings Per Share

<TABLE>
<CAPTION>
                                               Three Months Ended               Nine Months Ended
                                          -----------------------------   -----------------------------
                                          September 26,   September 27,   September 26,   September 27,
                                               1998            1997            1998            1997
                                          -------------   -------------   -------------   -------------
<S>                                       <C>             <C>             <C>             <C>           
Net income/(loss)                         $         393   $         332   $       1,105   $        (521)
                                          =============   =============   =============   =============

Weighted average shares of common stock
   outstanding - basic                            8,068           8,157           8,132           8,168
                                          =============   =============   =============   =============

Basic income/(loss) per share             $        0.05   $        0.04   $        0.14   $       (0.06)
                                          =============   =============   =============   =============
</TABLE>

                           Diluted Earnings Per Share

<TABLE>
<CAPTION>
                                                Three Months Ended               Nine Months Ended
                                           -----------------------------   -----------------------------
                                           September 26,   September 27,   September 26,   September 27,
                                                1998            1997            1998            1997
                                           -------------   -------------   -------------   -------------
<S>                                        <C>             <C>             <C>             <C>           
Net income/(loss)                          $         393   $         332   $       1,105   $        (521)
                                           =============   =============   =============   =============

Weighted average shares of common stock
   outstanding                                     8,068           8,157           8,132           8,168
Add: dilutive potential of common shares            --               140            --                89
                                           -------------   -------------   -------------   -------------
Weighted average shares of common stock
   outstanding  - dilutive                         8,068           8,297           8,132           8,257
                                           =============   =============   =============   =============

Dilutive income/(loss) per share           $        0.05   $        0.04   $        0.14   $       (0.06)
                                           =============   =============   =============   =============
</TABLE>


4.   COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 130, Reporting  Comprehensive  Income, which is effective for financial
     statement periods ending after December 15, 1997 and establishes  standards
     for  reporting  and  display of  comprehensive  income  and its  components
     (revenues,  expenses,  gains and  losses) in a full set of  general-purpose
     financial statements.  Comprehensive income was $393,000 and $1,105,000 for
     the three and nine months ended September 26, 1998, respectively.

5.   SEGMENT REPORTING

     In June 1997, the FASB issued SFAS No. 131, Disclosure about Segments of an
     Enterprise  and Related  Information,  which is effective  for fiscal years
     beginning  after  December 15, 1997 and  establishes  standards for the way
     that  public  business   enterprises  report  information  about  operating
     segments in annual financial statements and requires that those enterprises
     report selected  information about operating segments.  It also establishes
     standards for related  disclosures about products and services,  geographic
     areas and major  customers.  The Company does 

                                       7
<PAGE>
     not  believe  that the  adoption  of SFAS No.  131 will have a  significant
     effect on its reporting of segment information.

6.   STOCK REPURCHASE

     On April 14, 1998, the Company's Board of Directors  authorized the Company
     to repurchase up to 800,000  shares of its common stock,  or  approximately
     10% of all shares issued as of that date,  for issuance under the Company's
     stock option and purchase plans.  The stock is to be purchased from time to
     time on the open  market as  conditions  permit.  To date,  the Company has
     repurchased 225,020 shares at an average price of $5.23 per share.

                                       8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      This Quarterly  Report on Form 10-Q contains  forward-looking  statements.
The  words  "believe,"   "expect,"   "anticipate,"  and  "project"  and  similar
expressions identify forward-looking statements, which speak only as of the date
the statement was made. Such  forward-looking  statements are within the meaning
of that term in Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the Securities Exchange Act of 1934, as amended.  Such statements
may  include,  but not be limited to,  projections  of revenue,  income or loss,
capital expenditures, plans for future operations, financing needs or plans, and
plans  relating to products or services of the Company,  as well as  assumptions
relating to the foregoing.

      Statements in Exhibit 99 to this Quarterly  Report on Form 10-Q,  describe
factors,  among  others,  that could  contribute  to or cause actual  results to
differ  materially  from those  expressed  in such  forward-looking  statements.
Additional  factors that could cause actual  results to differ  materially  from
those   expressed  in  such   forward-looking   statements   are  set  forth  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  in the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 1997.

Results of Operations

<TABLE>
<CAPTION>
                   Qtr. End                 Qtr. End      Y-T-D                   Y-T-D
(in thousands)      9/26/98      Change      9/27/97     9/26/98      Change     9/27/97
-----------------------------------------------------------------------------------------
<S>                 <C>         <C>          <C>         <C>         <C>         <C>    
Total Revenues      $10,111     (18.4%)      $12,391     $30,951     (12.7%)     $35,450
-----------------------------------------------------------------------------------------
</TABLE>

During both the quarter and nine months ended September 26, 1998, total revenues
decreased  compared to the quarter and nine months ended  September  27, 1997. A
major  contributing  factor to the decline is the Company's  recent  decision to
withdraw from the low-margin  tower business has not yet been offset by sales of
new higher-margin DiscPort2, DiscPort VT and DiscZerver products.

<TABLE>
<CAPTION>
                   Qtr. End                 Qtr. End      Y-T-D                   Y-T-D
(in thousands)      9/26/98     Change       9/27/97     9/26/98     Change      9/27/97
-----------------------------------------------------------------------------------------
<S>                 <C>         <C>          <C>         <C>         <C>         <C>    
Gross Profit        $ 6,021     (14.7%)      $ 7,056     $18,635     (10.3%)     $20,764
% of Total 
Revenues              59.5%                    56.9%       60.2%                   58.6%
-----------------------------------------------------------------------------------------
</TABLE>

Gross profit  decreased  in absolute  dollars but  increased as a percentage  of
total revenues  during the three months ended September 26, 1998, as well as the
nine months ended  September  26, 1998, as compared to the same periods in 1997.
The  decrease in absolute  dollars was due to the  decrease in  revenues.  Gross
profit as a percent of revenues  improved  slightly during the third quarter and
year-to-date due to a change in product mix.

                                       9
<PAGE>
<TABLE>
<CAPTION>
                      Qtr. End                 Qtr. End      Y-T-D                    Y-T-D
(in thousands)         9/26/98     Change       9/27/97     9/26/98     Change       9/27/97
---------------------------------------------------------------------------------------------
<S>                    <C>         <C>          <C>         <C>         <C>         <C>     
Sales & Marketing      $ 2,655     (28.1%)      $ 3,695     $ 8,860     (29.1%)     $ 12,490
% of Total 
Revenues                 26.3%                    29.8%       28.6%                    35.2%
---------------------------------------------------------------------------------------------
</TABLE>

For both the  quarter  and nine  months  ended  September  26,  1998,  sales and
marketing  expenses  decreased in absolute  dollars and as a percentage of total
revenues compared to the same periods in 1997. These decreases are primarily due
to synergies created from the integration of Logicraft  Information Systems, now
doing business as Microtest  Enterprise  Group ("MEG").  MEG was acquired during
the fourth quarter of 1996 and was not fully integrated into Microtest until the
third  quarter  of 1997.  The  integration  of MEG  into  Microtest  included  a
significant reduction in headcount during the first and second quarters of 1997.
Additionally,  the Company  implemented  new cost  control  measures  during the
second half 1997, including the areas of sales and marketing.

<TABLE>
<CAPTION>
                           Qtr. End                Qtr. End      Y-T-D                  Y-T-D
(in thousands)              9/26/98     Change      9/27/97     9/26/98     Change     9/27/97
-----------------------------------------------------------------------------------------------
<S>                         <C>         <C>         <C>         <C>         <C>        <C>    
Research & Development      $ 1,698     (8.1%)      $ 1,847     $ 5,210     (14.1%)    $ 6,067
% of Total
Revenues                      16.8%                   14.9%       16.8%                  17.1%
-----------------------------------------------------------------------------------------------
</TABLE>

Research  and  development  expenses  decreased  in  absolute  dollars  and as a
percentage of total  revenues for the nine months ended  September 26, 1998, but
for the quarter,  they increased as a percentage of total revenues compared with
the same periods in 1997. The decrease stems  primarily from the  capitalization
of  software  development  costs  during  1998  for new  products.  The  Company
capitalized  approximately  $947,000 and  $524,000  during the nine months ended
September  26, 1998 and September  27, 1997,  respectively.  These costs will be
amortized over the life of the associated  products of approximately two to four
years as a charge to cost of goods sold. These  amortization  charges may result
in lowering the Company's net income in future periods.

<TABLE>
<CAPTION>
                             Qtr. End                Qtr. End      Y-T-D                  Y-T-D
(in thousands)                9/26/98     Change     9/27/97      9/26/98     Change     9/27/97
-------------------------------------------------------------------------------------------------
<S>                           <C>          <C>        <C>         <C>          <C>       <C>    
General & Administrative      $ 1,403      43.5%      $ 978       $ 3,513      12.5%     $ 3,124
% of Total
Revenues                        13.9%                  7.9%         11.4%                   8.8%
-------------------------------------------------------------------------------------------------
</TABLE>

General and administrative  expenses increased in both absolute dollars and as a
percentage of total revenues for the quarter and nine months ended September 26,
1998,  compared  to the same  periods  in 1997.  The  increase  during the third
quarter of 1998 was mainly the result of an increase in accounting  fees and bad
debt expense as well as a restructuring  of the European  operations.  Year over
year, the increase is primarily  attributable to an increase in bad debt expense
as well as a restructuring of the European operations.

                                       10
<PAGE>
<TABLE>
<CAPTION>
                       Qtr. End                Qtr. End      Y-T-D                  Y-T-D
(in thousands)          9/26/98     Change     9/27/97      9/26/98     Change     9/27/97
-------------------------------------------------------------------------------------------
<S>                     <C>         <C>         <C>          <C>        <C>        <C>    
Income Taxes            ($ 47)      122.9%      $ 205        $ 205      211.4%     ($ 184)
Effective Tax Rate      (13.6%)                 38.2%        15.6%                 (26.1%)
-------------------------------------------------------------------------------------------
</TABLE>

The  difference  between the effective tax rate and the statutory rate is mainly
attributable  to  foreign  sales  corporation  tax  benefits  and  research  and
development income tax credits.

<TABLE>
<CAPTION>
                      Qtr. End               Qtr. End       Y-T-D                  Y-T-D
(in thousands)         9/26/98     Change     9/27/97      9/26/98     Change     9/27/97
------------------------------------------------------------------------------------------
<S>                     <C>         <C>        <C>         <C>         <C>        <C>    
Net Income/(Loss)       $ 393       18.4%      $ 332       $ 1,105     312.1%     ($ 521)
% of Total
Revenues                 3.9%                   2.7%          3.6%                 (1.5%)
------------------------------------------------------------------------------------------
</TABLE>

Net income  increased  in both  absolute  dollars and as a  percentage  of total
revenues  for both the quarter and nine months  ended  September  26,  1998,  as
compared  to the same  periods of 1997.  This  increase  is due  primarily  to a
significant decrease in operating expenses for the quarter and nine months ended
September 26, 1998 as compared with the quarter and nine months ended  September
27, 1997. As discussed above, MEG was fully integrated into Microtest during the
second and third  quarters  of 1997.  The  integration  included  a  significant
headcount  reduction.  Also,  the Company's  implementation  of new cost control
measures during 1997 aided in the decrease in operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations  primarily  through  operating  cash. At
September 26, 1998, the Company had cash and cash  equivalents of $13.1 million.
This  represents a $1.5  million  increase in cash  equivalents  during the nine
months ended  September 26, 1998, as compared to the same period ended September
27, 1997, due primarily to the collection of accounts receivable.

During the second quarter of 1997, the Company obtained a $10 million  unsecured
revolving  credit  facility  with Bank of America,  which is to be utilized  for
general corporate and working capital  purposes.  The credit facility carries an
interest  rate equal to Bank of  America's  "Reference  Rate" plus 1.50%.  Major
covenants of the credit  facility  include:  (i) the Company,  on a consolidated
basis, not incurring a net loss and operating loss in two consecutive  quarters;
(ii) the Company maintaining a modified quick ratio of no less than 1.50%; (iii)
the  Company  maintaining  a  Tangible  Net  Worth  of no less  than  90% of the
Company's  Tangible  Net Worth at December  31,  1996;  and (iv) the Company not
permitting its total  liabilities  to exceed 0.75 times  Tangible Net Worth.  No
amounts  were  outstanding  under this  credit  facility  and the Company was in
compliance with all loan covenants at September 26, 1998.

                                       11
<PAGE>
Capital  expenditures  during the nine  months  ended  September  26,  1998 were
approximately  $959,000,  the  majority of which was for  computer  hardware and
software  and  leasehold  improvements.  The  Company's  capital  budget for the
remaining  quarter of 1998 is approximately  $50,000,  which includes  software,
hardware,  leasehold  improvements and other of $5,000,  $20,000,  $20,000,  and
$5,000, respectively.

Management  believes cash flows from  operations  and  available  cash under the
credit  facility will be sufficient to meet the cash needs of the Company in the
foreseeable future.

YEAR 2000 ISSUES

As with other organizations, some of the Company's computer programs, as well as
those of its vendors,  were originally  designed to recognize  calendar years by
their last two digits. Calculations performed using these truncated fields would
not work  properly  with dates from the year 2000 and  beyond.  The  Company has
initiated  efforts to remedy  this  situation  and  expects  all  programs to be
corrected and tested prior to the year 2000.  The Company is also in the process
of obtaining year 2000  compliance  data on all of its major vendors and expects
this  process to be complete  prior to the year 2000.  To date,  the Company has
incurred capital expenditures of approximately $289,000 related to this project.
The Company does not expect that the incremental costs of this project will have
a material adverse effect on the Company's  consolidated financial statements or
results  of  operations  in any future  periods.  All of the  Company's  current
products and planned future releases are year 2000 compliant.

PART II.  OTHER INFORMATION

Item 1 - Legal Proceedings

            The Company is from time to time involved in legal  proceedings of a
character  normally  incident  to its  business,  including  various  claims and
pending actions against the Company seeking damages.

Item 2. - Changes in Securities

      None

Item 3. - Defaults Upon Senior Securities

      Not applicable

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

      Not applicable.

Item 5. - Other Information

      None

                                       12
<PAGE>
Item 6. - Exhibits and Reports on Form 8-K

      a) Exhibits

         Exhibit 99 - Private  Securities  Litigation  Reform  Act of 1995  Safe
                      Harbor Compliance Statement for Forward-Looking Statements

      b) Reports on Form 8-K

         No Current Reports on Form 8-K were filed during the three months ended
         September 26, 1998.

                                       13
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                 MICROTEST, INC.
                                 ---------------
                                   Registrant

Date: November 10, 1998                        /s/ Richard G. Meise             
                                               ---------------------------------
                                               Richard G. Meise
                                               Chief Executive Officer and
                                               Chairman of the Board

Date: November 10, 1998                        /s/ Charles V. Mihaylo           
                                               ---------------------------------
                                               Charles V. Mihaylo
                                               President and
                                               Chief Operating Officer

Date: November 10, 1998                        /s/ John J. O'Block              
                                               ---------------------------------
                                               John J. O'Block
                                               Chief Financial Officer

                                       14