Securities and Exchange Commission
                              Washington D.C. 20549

                                   Form 10-QSB


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

         For the quarterly period ended           November 30, 1996
                                         -------------------------------------


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

         For the transition period from ________________ to __________________


                        Commission File Number          0-15304
                                              ------------------------

                               AVESIS INCORPORATED
                -------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

           Delaware                                         86-0349350
-------------------------------                ---------------------------------
(State or other jurisdiction of
  incorporation or organization)               (IRS Employer Identification No.)


         100 West Clarendon Avenue, Suite 2300          Phoenix, Arizona  85013
-------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                (602) 241 - 3400
                   ------------------------------------------
                           (Issuer's telephone number)


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 outstanding shares of the registrant's Common Stock on January 10,
1996 was 4,100,420.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT 
(Check One)   [ ] Yes   [X]  No
                                     1 of 10
<PAGE>
                          PART I FINANCIAL INFORMATION

Item 1    Financial Statements
                               AVESIS INCORPORATED
                                  BALANCE SHEET
                                NOVEMBER 30, 1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                     ASSETS
                                     ------

<S>                                                                                 <C>          
Current assets:
    Cash and cash equivalents                                                       $     605,203
    Receivables, net                                                                      232,207
    Prepaid expenses and other                                                             76,918
                                                                                    -------------
         Total current assets                                                             914,327
    Property and equipment, net                                                           587,548
    Deferred debenture issuance costs, net                                                  1,949
    Deposits                                                                              183,815
                                                                                    -------------
                                                                                    $   1,687,639
                                                                                    =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
    Accounts payable                                                                $     279,085
    Accrued expenses-
       Compensation                                                                        49,632
       Other                                                                              134,050
    Deferred income                                                                        25,374
                                                                                    ------------- 
           Total current liabilities                                                      488,142

Convertible subordinated debentures                                                       189,000
    Less unamortized debenture discount                                                    (2,065)
Accrued rent                                                                              108,100
Notes payable to stockholders                                                             160,000
                                                                                    ------------- 
           Total liabilities                                                              943,177
                                                                                    ------------- 

Stockholders' equity:
    Preferred stock $.01 par value, authorized 
      12,000,000 shares:
        $100 Class A, nonvoting cumulative convertible preferred
         stock, Series 1, $.01 par value; authorized 1,000,000
         shares; none issued and outstanding (liquidation preference
         of $100 per share)                                                             - - - - -
        $10 Class A, nonvoting cumulative convertible preferred stock,
         Series 2, $.01 par value; authorized 1,000,000 shares; 388,180 shares
         issued and outstanding (liquidation preference of
         $10 per share)                                                                     3,882
        Class A, voting cumulative convertible preferred stock,
         Series 3, $.01 par value; authorized 100,000 shares; none issued
         and outstanding (liquidation preference of $100 per share)                     - - - - -
    Common stock of $.01 par value, authorized
        12,000,000 shares; 4,100,420 shares issued and outstanding                         41,004
    Additional paid-in capital                                                          9,949,158
    Accumulated deficit                                                                (9,249,582)
                                                                                    -------------
           Net stockholders' equity                                                       744,462
                                                                                    ------------- 
                                                                                    $   1,687,639
                                                                                    =============
</TABLE>
        The accompanying notes are an integral part of these statements.
                                      - 2 -
<PAGE>
                               AVESIS INCORPORATED
                            STATEMENTS OF OPERATIONS
         FOR THE QUARTER AND SIX MONTHS ENDED NOVEMBER 30, 1996 AND 1995
                                   (Unaudited)
<TABLE>
<CAPTION>
                                             Quarters Ended                            Six Months Ended
                                      November 30       November 30              November 30        November 30
                                     ------------------------------             -------------------------------
                                         1996              1995                     1996               1995
                                     ------------      ------------             ------------      -------------
<S>                                  <C>               <C>                      <C>               <C>          
Service revenues:
    Administration fees              $    764,385      $  1,001,168             $  1,676,469      $   2,114,909
    Buying group sales                    370,892           371,533                  759,521            733,687
    Provider fees                          34,284            51,402                   68,336            109,122
    Other                                  30,701            23,614                   44,978             51,960
                                     ------------      ------------             ------------      -------------

       Total service revenues           1,200,262         1,447,717                2,549,303          3,009,678

Cost of services                          875,251           962,876                1,764,060          1,926,272
                                     ------------      ------------             ------------      -------------

       Income from services               325,011           484,841                  785,244          1,083,406

General and administrative expenses       251,979           296,747                  506,944            591,082

Selling and marketing expenses            124,566           228,966                  290,951            461,383
                                     ------------      ------------             ------------      -------------

     Income (loss) from operations        (51,534)          (40,872)                 (12,651)            30,941
                                     ------------      ------------             ------------      -------------

Non-operating income (expense):
Other income (expense)                        (79)             (246)                     (79)            15,171
    Interest income                         5,995             5,357                   12,233             12,019
    Interest expense                       (7,359)           (6,805)                 (14,744)           (15,043)
                                     ------------      ------------             ------------      -------------

     Net non-operating income
     (expense)                             (1,443)           (1,694)                  (2,590)            12,147
                                     ------------      ------------             ------------      -------------

     Net income (loss)               $    (52,977)     $    (42,566)            $    (15,241)     $      43,088
                                     ============      ============             ============      =============

Net income (loss) per common
share                               $       (0.03)     $      (0.03)            $      (0.05)     $       (0.03)
                                    =============      ============             ============      =============  

Weighted average common
shares and equivalents
outstanding                             4,100,420         4,075,420                4,100,420          4,075,420
                                    =============      ============             ============      =============
</TABLE>
        The accompanying notes are an integral part of these statements.
                                      - 3 -
<PAGE>
                               AVESIS INCORPORATED
                            STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996 AND 1995
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                        1996              1995
                                                                   -------------      ------------
<S>                                                                <C>                <C>         
Cash flows from operating activities:
    Net income                                                     $     (15,241)     $     43,088
                                                                   -------------      ------------
    Adjustments to reconcile net income to net
      cash provided by (used in) operating activities:
      Depreciation and amortization                                       84,542            57,600
      Gain on fixed asset disposal                                           -0-            (8,004)
      Gain on retirement of debentures                                       -0-            (7,067)
      Provision for losses on accounts receivable                           (149)           (6,619)
      Changes in assets and liabilities:
        Decrease in receivables                                           83,349            41,563
        Decrease (increase) in prepaid expenses                           36,158          (174,226)
        Decrease in other assets                                             -0-            23,907
        Increase (decrease) in accounts payable                           55,175            (3,525)
        (Decrease) in accrued expenses                                    (2,683)          (19,123)
        (Decrease) in deferred income                                     (5,991)          (13,566)
        Increase in accrued rent                                           4,899             8,484
                                                                   -------------      ------------
             Total adjustments                                           255,300          (100,576)
                                                                   -------------      ------------

        Net cash provided by (used in) operating activities              240,059           (57,488)
                                                                   -------------      ------------

Cash flows from investing activities:
    Proceeds from dispositions of property and equipment                     -0-             8,250
    Purchases of property and equipment                                  (70,939)          (46,394)
                                                                   -------------      ------------
        Net cash (used in) investing activities                          (70,939)          (38,144)
                                                                   -------------      ------------

Cash flows from financing activities:
    Repurchase of debentures                                                 -0-           (59,743)
                                                                   -------------      ------------
        Net cash (used in) financing activities                              -0-           (59,743)
                                                                   -------------      ------------

        Net increase (decrease) in cash and cash equivalents             169,120          (155,375)

Cash and cash equivalents, beginning of period                           436,083           815,567
                                                                   -------------      ------------

Cash and cash equivalents, end of period                           $     605,203      $    660,192
                                                                   =============      ============



Supplemental information:
-------------------------

(a) Interest paid during the period -
    Debentures                                                               -0-             8,978
    Notes payable to stockholders                                            -0-             4,839
</TABLE>
        The accompanying notes are an integral part of these statements.
                                      - 4 -
<PAGE>
                               AVESIS INCORPORATED
                          NOTES TO FINANCIAL STATEMENTS
                           NOVEMBER 30, 1996 AND 1995
                                   (Unaudited)

1.  The condensed financial statements included herein have been prepared by the
    Company  without  audit  pursuant  to  the  rules  and  regulations  of  the
    Securities and Exchange Commission.

    Certain information and footnote  disclosures normally included in financial
    statements  prepared at the fiscal year end have been  condensed  or omitted
    pursuant to such rules and  regulations,  although the Company believes that
    the  disclosures  are  adequate  to  make  the  information   presented  not
    misleading.

    In  the  opinion  of  Management,   the  financial  statements  include  all
    adjustments,  consisting only of normal recurring adjustments,  necessary in
    order to make the financial statements not misleading. Results of operations
    for the periods presented are not necessarily indicative of the results that
    may be experienced for the full year ending May 31, 1997.

2.  For the quarter and six months  ended  November  30,  1996,  loss per common
    share is computed by dividing net loss, after giving  appropriate  effect to
    undeclared  preferred stock dividends  payable and accrued during the period
    ($87,342 and $174,684 for the quarter and six months,  respectively)  by the
    weighted average number of common shares outstanding during the period. (see
    Exhibit 11)
                                      - 5 -
<PAGE>
Item 2   Management's Discussion and Analysis or Plan of Operations
         For the Quarter and Six Months Ended November 30, 1996 and 1995

    Except for the historical  information  contained herein,  the discussion in
this Form 10-QSB  contains  forward-looking  statements  that involve  risks and
uncertainties.  The Company's actual results could differ  materially from those
discussed  here.  Factors  that could cause or  contribute  to such  differences
include,  but are not limited  to, the loss of a  significant  sponsor,  a major
change  in  healthcare  legislation,  and  the  discussion  in  this  "Item 2 --
Management's  Discussion and Analysis or Plan of  Operations,"  as well as those
factors  discussed  elsewhere herein or in any document  incorporated  herein by
reference.

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

Service  revenues  totaled  $1,200,262  and  $2,549,303  for the quarter and six
months ended  November 30, 1996,  compared to $1,447,717  and $3,009,678 for the
same  periods in fiscal  1996,  representing  decreases  of  $247,455  (17%) and
$460,375  (15%) for the quarter and six months ended  November 30, 1996 compared
to  the  same   periods  in  the  prior  year,   respectively.   The   Company's
administration  fees from vision and hearing  programs  accounted  for  $472,706
(39%) and  $627,195  (43%) of total  service  revenues  for the  quarters  ended
November  30, 1996 and 1995,  respectively,  and $973,997  (38%) and  $1,284,131
(43%) of total service  revenues for the six months ended  November 30, 1996 and
1995,  respectively.  The  decrease  in vision and  hearing  revenue  during the
current  fiscal  year was  primarily  the  result of the loss of one  sponsor in
October 1996. A "sponsor" is a employer,  insurance group, or other organization
that offers the  Company's  benefits to it  employees/members.  The loss of this
sponsor  reduced  total  cardholders  by  approximately  65,000.  This  loss was
partially  offset by the addition of a new sponsor that  enrolled  approximately
32,000  cardholders  in the  Company's  hearing plan.  There were  approximately
365,000 and 386,000  vision and hearing  cardholders as of November 30, 1996 and
1995,  respectively.  An additional sponsor was signed during January, 1997, the
revenues,  costs, and number of cardholders  associated with this sponsor cannot
accurately be determined at this point in time.

Vision  provider fee revenue  declined by $17,106 (33%) and $40,774 (37%) during
the quarter and six months ended  November 30, 1996 compared to the same periods
in fiscal year 1995 due in part to a  modification  of the Company's  agreements
with its providers. A provider is a doctor or other practitioner that has agreed
to  provide  services  to the  Company's  benefit  plan  cardholders.  Under the
modified  agreement,  for new sponsors,  the providers are not required to pay a
fee based on gross sales to that sponsor's members.

The Company's dental program  accounted for $290,778 (24%) and $448,164 (31%) of
total  service  revenues  for the  quarters  ended  November  30, 1996 and 1995,
respectively,  and $700,669 (27%) and $913,567  (30%) of total service  revenues
for the six months  ended  November  30,  1996 and 1995,  respectively.  The net
change in this line of business  was due to the loss of 65,000  cardholders,  as
discussed above, and the addition of approximately  56,000  cardholders from the
new sponsor who also enrolled in the Company's  dental plan. The revenue derived
from the new  sponsor  is  significantly  less  than the  revenue  from the lost
sponsor on a per cardholder basis.  There were  approximately  72,500 and 77,000
dental cardholders as of November 30, 1996 and 1995, respectively.

On December 30, 1992,  the Company  completed  the sale of its pharmacy  line of
business to Med Net  (formerly  Medi-Mail,  Inc.) for 298,333  unregistered  and
35,000  registered  shares of Medi-Mail Common Stock. The Company  contracted to
provide  certain  administrative  services  with respect to the pharmacy line of
business  until  December  31,  1993.  However,  due to  delays  encountered  by
Medi-Mail  during the conversion of the claims  processing,  the Company entered
into a month to month agreement to continue to provide  administrative  services
to Medi-Mail.  Medi-Mail terminated the agreement in August 1995; therefore, the
Company did not generate any revenues related to the pharmaceutical  program for
the quarter ended November 30, 1995.  Pharmaceutical  revenues were $78,281 (3%)
of total service revenues during the six months ended November 30, 1995.

The Company makes available to its providers a buying group program that enables
the  provider  to purchase  frames  from the  manufacturers  at  discounts  from
wholesale  costs.  These  discounted  prices are generally lower than a provider
could negotiate  individually due to the large volume of purchases of the buying
group.  Buying group revenues accounted for $370,892 (31%) and $371,533 (26%) of
total  service  revenues  for the  quarters  ended  November  30, 1996 and 1995,
respectively,  and $759,521 (30%) and $733,687  (24%) of total service  revenues
for the six months ended November 30, 1996 and 1995, respectively.
                                       -6-
<PAGE>
Past and future  revenues in all lines of business are  directly  related to the
number of cardholders enrolled in the Company's benefit programs. However, there
may be  significant  pricing  differences  depending  on whether  the benefit is
insured in part or whole by the plan  sponsor.  The  Company's  cardholder  base
principally  is derived from a limited  number of sponsors.  The Company's  four
largest sponsors account for approximately 69% of the total  administration  fee
revenue for the quarter ended November 30, 1996.

Cost of services were $875,251 and $962,876 for the quarters  ended November 30,
1996 and 1995,  respectively,  and  $1,764,060 and $1,926,272 for the six months
ended  November  30, 1996 and 1995,  respectively.  Cost of  services  decreased
$87,625 (9%) and $162,212 (8%) for the quarter and six months ended November 30,
1996, respectively, compared to the same periods in the prior fiscal year. These
costs primarily relate to servicing cardholders,  providers,  and sponsors under
the Company's vision, hearing and dental benefit programs as well as the cost of
frames that are sold through the  Company's  buying  group  program as discussed
above.  The decrease in cost of services during the quarter and six months ended
November 30, 1996  compared to the same periods in the prior fiscal year was due
to the associated  decrease in revenue during the quarter.  The cost of services
did not decrease as greatly as revenue due to the loss of  efficiencies of scale
related to the volume of claims paid. Additionally, due to the reorganization in
the customer  service and claims  processing  area of the Company's  activities,
where a portion of the middle management was eliminated,  the Company realized a
decrease in personnel expense included in the cost of services.

General and administrative  expenses were $251,979 and $296,747 for the quarters
ended  November 30, 1996 and 1995,  respectively,  and $506,944 and $591,082 for
the six months  ended  November  30,  1996 and 1995,  respectively.  General and
administrative  expenses  decreased  $44,768  (15%)  and  $84,138  (14%) for the
quarter and six months ended  November 30, 1996,  respectively,  compared to the
same periods in the prior fiscal year. These costs include  depreciation,  legal
and professional fees,  insurance and consulting fees related to National Health
Enterprises  (management  consultants).  The decrease is primarily  due to legal
fees of approximately $40,000 directly related to a lawsuit settled in the prior
fiscal year and a reduction in personnel  involved in the finance and accounting
functions.

Selling and marketing expenses were $124,566 and $249,111 for the quarters ended
November 30, 1996 and 1995, respectively,  and $290,951 and $448,282 for the six
months ended  November 30, 1996 and 1995,  respectively.  Selling and  marketing
expenses  decreased  $124,545  (50%) and $157,331  (35%) for the quarter and six
months ended  November 30, 1996,  respectively,  compared to the same periods in
the prior fiscal year.  Selling and marketing  expenses include  marketing fees,
broker  commissions,  inside sales and marketing  salaries and related expenses,
travel  related to the  Company's  sales  activities  and an allocation of other
overhead expenses relating to the Company's sales and marketing  functions.  The
decrease is due to the reduction in broker  commissions  directly related to the
reduction in revenue,  the outsourcing of a portion of the activities  performed
by the inside sales and  marketing  department,  and the reduction of travel and
entertainment  expenditures.  A significant  amount of the  Company's  marketing
activities  has been  outsourced  to  management  consultants,  National  Health
Enterprises,  for a cost lower than the Company  incurred  when  performing  the
functions internally.
                                       -7-
<PAGE>
Liquidity and Capital Resources
-------------------------------

The  Company  had cash and cash  equivalents  of  $605,203  and  $660,192  as of
November  30, 1996 and 1995,  respectively.  The net decrease in cash of $54,989
during the period from  November  30, 1995 to  November  30, 1996  consists of a
decrease in cash of $224,109 during the first six months of the period (December
1, 1995 through May 31, 1996),  and an increase in cash of $169,120 the last six
months of the period (June 1, 1996 through November 30, 1996). The negative cash
flow  mentioned  above is primarily  associated  with the  software  development
project for the Company's new mainframe computer. The positive cash flow for the
six months  ended  November  30, 1996 is  primarily  due to the  collections  of
accounts  receivable,  decrease  in  prepaid  expenses,  and  timing  of  vendor
payments.  The Company is  maintaining  its policy of paying vendors on a net 45
day basis,  and  continues to be current on all of its trade  accounts  payable.
Current cash on hand is expected to allow the Company to sustain  operations for
at least the next twelve months.

The Company's  management has taken the following  steps in order to sustain the
viability  of the Company and  continue  positive  cash flows:  the  sublease of
unused office space, thereby reducing monthly rent by approximately  $8,000; the
maintenance of the appropriate  level of staff,  reducing monthly salary expense
by approximately  $10,000; the deferral of cash payments made to related parties
(National Health  Enterprises) for consulting  services of approximately  $6,000
per month,  the balance of $18,000 as of November 30, 1996 is to be repaid on an
undetermined  future  date;  and the  addition of new  sponsors,  as  previously
discussed,  replacing most of the reduced  number of  cardholders  caused by the
loss of a  major  sponsor  in the  prior  fiscal  year.  The  Company  has  also
established a chiropractic  benefit and is planning to expand its dental network
of providers to increase its marketability.
                                       -8-
<PAGE>
                            PART II OTHER INFORMATION

Item 3. Defaults Upon Senior Securities

(b)     The  Company  determined  not to pay the  quarterly  dividend  otherwise
        scheduled  for  payment  in  January  1996,  on shares  of its  Series 2
        Preferred Stock. The dividend is cumulative. The arrearage is $1,456,206
        as of November 30, 1996.

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

(a)     An annual  meeting of  stockholders  of the Company was held on December
        18, 1996

(c)     There was one matter voted upon at the meeting, as follows:

           The following nominees  were elected for one-year  terms as directors
           of the Company:
                William R. Cohen       William L. Richter       Gerald L. Cohen
                Samuel A. Oolie        Kenneth L. Blum, Sr.

           The results of voting for each nominee were as follows:
                Number of votes cast for:                   3,092,410
                Number of votes cast against:                   5,660
                Number of abstentions                               0
                Number of non-votes                                 0

Item 6. Exhibits and Reports on Form 8-K

(a)     The following exhibits are being filed with this report:

        11       Statement re:  Computation of per Share Earnings
        27       Financial Data Schedule

(b)     No reports on Form 8-K were filed during the quarter ended  November 30,
        1996.
                                       -9-
<PAGE>
                                   SIGNATURES

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


                                              AVESIS INCORPORATED
                                - - - - - - - - - - - - - - - - - - - - - - - -
                                                 (Registrant)



Date:     1/13/97                             /s/ Neal A. Kempler
    ---------------------                ---------------------------------------
                                         Neal A. Kempler, Vice President
                                         and Secretary



Date:     1/13/97                            /s/ Joel H. Alperstein
    ---------------------                ---------------------------------------
                                         Joel H. Alperstein, Director of Finance
                                         (Principal Financial Officer)

                                      -10-