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             August 31, 1998
                                         ---------------------------------------

[ ]  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.)


                 3724 N. Third St., Suite 300, Phoenix, AZ 85012
                 -----------------------------------------------
                    (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 October
13, 1998 was 7,394,297.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
         (Check One)  [ ] Yes [X] No

                                     1 of 13
<PAGE>
                          PART I FINANCIAL INFORMATION

Item 1 Financial Statements

                              AVESIS INCORPORATED
                                 BALANCE SHEET
                             AS OF AUGUST 31, 1998

                                     ASSETS
                                     ------
Current assets:
    Cash and cash equivalents                                    $  1,931,247
    Receivables, net                                                  340,746
    Prepaid expenses and other                                        128,852
                                                                 ------------
         Total current assets                                       2,400,845
Property and equipment, net                                           432,667
Deposits and other assets                                             242,787
                                                                 ------------
         Total Assets                                            $  3,076,299
                                                                 ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Current liabilities:
    Accounts payable                                             $  1,265,229
    Current installments of obligations under 
      capital lease                                                    10,288
    Accrued expenses:
       Compensation                                                    29,732
       Other                                                           47,583
    Deferred income                                                    21,347
                                                                 ------------
           Total current liabilities                                1,374,179

Accrued rent                                                           50,135
Obligations under capital lease, excluding current installments        28,556
                                                                 ------------
           Total liabilities                                        1,452,870
                                                                 ------------
Stockholders' equity:
    Preferred stock $.01 par value, authorized 12,000,000 shares: 
       $3.75 Class A, senior nonvoting cumulative 
        convertible preferred stock, Series A, $.01 par 
        value; authorized 1,000,000 shares; 315,260 
        issued and outstanding (liquidation preference 
        of $3.75 per share)                                             3,153
       $10 Class A, nonvoting cumulative convertible 
        preferred stock, Series 2, $.01 par value;
        authorized 1,000,000 shares; 6,500 shares issued
        and outstanding (liquidation preference of $10 per 
        share) and $33,638 of dividends in arrears at 
        $5.175 per share; dividends accrue at $.225 per 
        share per calendar quarter                                         65
    Common stock of $.01 par value, authorized
        20,000,000 shares; 7,411,297 shares issued and
        outstanding                                                    74,113
    Additional paid-in capital                                     10,527,166
    Accumulated deficit                                            (8,981,068)
                                                                 ------------
           Net stockholders' equity                                 1,623,429
                                                                 ------------
                                                                 $  3,076,299
                                                                 ============

        The accompanying notes are an integral part of these statements.

                                       -2-
<PAGE>
                               AVESIS INCORPORATED
                            STATEMENTS OF OPERATIONS
                 FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997
                                   (Unaudited)

                                                          Quarters Ended
                                                     August 31      August 31
                                                    --------------------------
                                                        1998           1997    
                                                       ----           ----    
Service revenues:
    Administration fees                             $ 1,994,944    $ 1,364,712
    Buying group sales                                  405,713        418,530
    Provider fees                                        37,053         26,466
    Other                                                 1,588          1,504
                                                    -----------    -----------

     Total service revenues                           2,439,298      1,811,212

Cost of services                                      1,832,672      1,382,649
                                                    -----------    -----------

     Income from services                               606,626        428,563

General and administrative expenses                     237,884        227,139

Selling and marketing expenses                          249,423        143,260
                                                    -----------    -----------

     Income from operations                             119,319         58,164

Non-operating income (expense):
    Other income                                          1,319          1,710
    Interest income                                      10,128          8,753
    Interest expense                                     (1,104)        (7,385)
                                                    -----------    -----------

     Net non-operating income (expense)                  10,343          3,078
                                                    -----------    -----------

     Net income                                     $   129,662    $    61,242
                                                    ===========    ===========

Preferred stock dividends                               (28,053)       (87,342)
                                                    -----------    -----------
     Net income/(loss) available to common 
      stockholders                                  $   101,599    $   (26,100)
                                                    ===========    ===========

Earnings per share - basic                          $      0.02    $      (.00)
                                                    ===========    ===========

Earnings per share - diluted                        $      0.02    $      (.00)
                                                    ===========    ===========
Weighted average common and equivalent shares
  outstanding - basic                                 5,059,711      4,100,420
                                                    ===========    ===========
Weighted average common and equivalent shares 
  outstanding - diluted                               8,327,918      4,138,220
                                                    ===========    ===========

        The accompanying notes are an integral part of these statements.

                                       -3-
<PAGE>
                               AVESIS INCORPORATED
                            STATEMENTS OF CASH FLOWS
                 FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997
                                   (Unaudited)

                                                              Quarters Ended
                                                            1998         1997
                                                            ----         ----
Cash flows from operating activities:
  Net income                                             $  129,662    $ 61,242
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation and amortization                            27,892      25,609
    Changes in assets and liabilities:
      Decrease in receivables                               139,162      51,557
      (Increase) Decrease in prepaid expenses               (13,401)     10,317
      Decrease (Increase) in other assets                       722     (48,775)
      Increase in accounts payable                          159,064     128,917
      (Decrease) in accrued expenses                        (31,165)    (50,298)
      Increase (Decrease) in deferred income                  4,399      (8,114)
      (Decrease) in accrued rent                             (5,875)     (5,091)
                                                         ----------    --------
           Total adjustments                                280,798     104,122
                                                         ----------    --------

           Net cash provided by operating activities        410,460     165,364
                                                         ----------    --------
Cash flows from investing activities:
  Purchases of property and equipment                       (52,702)    (58,617)
  Proceeds from dispositions of property and equipment        1,370         -0-
                                                         ----------    --------
           Net cash used in investing activities            (51,332)    (58,617)
                                                         ----------    --------

Cash flows from financing activities:
  Principal payments under capital lease obligations         (2,579)        -0-
  Exercise of stock options and warrants                  1,228,656         -0-
  Payments for repurchase of common and preferred stock    (647,568)        -0-
                                                         ----------    --------
           Net cash provided by financing activities        578,509         -0-
                                                         ----------    --------

           Net increase in cash and cash equivalents        937,637     106,747

Cash and cash equivalents at beginning of period            993,610     817,535
                                                         ----------    --------

Cash and cash equivalents at end of period               $1,931,247    $924,282
                                                         ==========    ========

        The accompanying notes are an integral part of these statements.

                                       -4-
<PAGE>
                               AVESIS INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 1998 AND 1997
                                   (Unaudited)

Note 1. Basis of Presentation

     The accompanying  unaudited condensed  consolidated financial statements of
Avesis  Incorporated  (the  "Company")  have been  prepared in  accordance  with
generally accepted accounting  principles for interim financial  information and
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted  accounting  principles for a complete financial statement
presentation.  In the opinion of Management,  such unaudited interim information
reflects  all  adjustments,  consisting  only  of  a  normal  recurring  nature,
necessary  to  present  the  Company's  financial  position  and the  results of
operations and cash flows for the periods  presented.  The results of operations
for interim periods are not necessarily indicative of the results to be expected
for a full  fiscal  year.  It is  suggested  that these  condensed  consolidated
financial   statements  be  read  in  conjunction  with  the  Company's  audited
consolidated  financial  statements  included in the Company's  Annual Report on
Form 10-KSB, for the year ended May 31, 1998.

Note 2. Earnings (Loss) per Share

     A summary of the  reconciliation  from basic  earnings  (loss) per share to
diluted  earnings  (loss) per share for the three month periods ended August 31,
1998 and 1997 follows:

<TABLE>
<CAPTION>
                                                         Period ended     Period ended
                                                        August 31, 1998  August 31, 1997
                                                        ---------------  ---------------
<S>                                                    <C>             <C>         
Net earnings                                           $    129,662       $     61,242
Less:  preferred stock dividends                             28,063             87,342
                                                       ============       ============
Income (loss) available to common stockholders              101,599            (26,100)
                                                       ============       ============
Basic EPS - weighted average shares outstanding           5,059,711          4,100,420
                                                       ============       ============
Basic earnings (loss) per share                        $       0.02       $      (0.00)
                                                       ============       ============
Basic EPS - weighted average shares outstanding           5,059,711          4,100,420
Effect of dilutive securities:
 Convertible debentures                                         --              37,800
 Convertible preferred stock                              3,268,207                 --
                                                       ------------       ------------
Dilutive EPS - weighted average shares outstanding        8,327,918          4,138,220
Net earnings                                           $    129,662       $    (26,100)
Interest expense on non-CSE debt                               --                4,489
                                                       ------------       ------------
                                                            129,662            (21,611)
Diluted earnings (loss) per share                      $       0.02       $      (0.00)
                                                       ============       ============
Convertible  debentures  not included in diluted EPS
 since antidilutive                                           --                    --
                                                       ============       ============
Convertible  Preferred Stock not included in diluted
  EPS since antidilutive                                       --              970,450
                                                       ============       ============

</TABLE>

                                       -5-
<PAGE>
Note 3. Use of Estimates

     Management  of the  Company  has made  certain  estimates  and  assumptions
relating to the  reporting  of assets,  liabilities,  revenues  and  expenses to
prepare  the  financial   statements  in  conformity  with  generally   accepted
accounting principles. Actual results could differ from those estimates.

Note 4. Preferred Stock

     On July 27,  1998 the  Company's  Board of  Directors  adopted  resolutions
canceling  the  Certificate  of  Designation  of the  Company's  $100  Class  A,
Nonvoting  Cumulative  Convertible  Preferred Stock,  Series 1 and the Company's
Class A, Convertible  Preferred Stock, Series 3. No shares of Series 1 Preferred
and Series 3 Preferred  are  outstanding.  The  1,000,000  authorized  shares of
Series 1 Preferred and the 100,000  authorized shares of Series 3 Preferred have
been returned to the status of unissued preferred stock.


ITEM 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
          FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997

     The  statements   contained  in  this  discussion  and  analysis  regarding
management's anticipation of adequacy of cash reserves for operations,  adequacy
of reserves for claims,  anticipated level of operating  expenses related to new
cardholders,  adequacy of capital  allocation  for  dividends,  viability of the
Company,    cash   flows   and   marketability   of   the   Company   constitute
"forward-looking"  statements  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995. Such statements  involve risks and uncertainties,
which could cause actual results to differ  materially from the  forward-looking
statements.  Management's  anticipation is based upon assumptions  regarding the
market in which the Company  operates,  the level of  competition,  the level of
demand for  services,  the  stability  of costs,  the  retention of Sponsors and
cardholders  enrolled in the Company's  benefit  programs,  the relevance of the
Company's   historical   performance,   and  the  stability  of  the  regulatory
environment.  Any of these  assumptions  could prove  inaccurate,  and therefore
there can be no assurance that the forward-looking  information will prove to be
accurate.

     Avesis Incorporated,  a Delaware corporation (together with its subsidiary,
the  "Company"),  incorporated  in June 1978,  markets and  administers  vision,
hearing, dental and chiropractic managed care and discount programs ("Programs")
nationally.  The  Programs  are designed to enable  participants  ("Members"  or
"Cardholders"),  who are enrolled through various Sponsoring  organizations such
as  insurance  carriers,   HMOs,  Blue  Cross  and  Blue  Shield  organizations,
corporations,  unions and various associations ("Sponsors"),  to realize savings
on  purchases of services and  products  through  networks of providers  such as
ophthalmologists,  optometrists,  opticians,  hearing specialists,  dentists and
chiropractors ("Providers").

                                       -6-
<PAGE>
     The Company derives its  administration  fee revenue from plan Sponsors who
customarily  pay a set fee per Member per month.  Administration  fee revenue is
recognized  on the accrual basis during the month that the Member is entitled to
use the  benefit.  There  are  arrangements  with  certain  Sponsors  to pay for
services rendered by the Company on a fee for service basis. Based upon the type
of program  (e.g.,  managed  care,  discount,  third party  administration)  the
Provider's  claim for service provided to Members is paid either by the Company,
Sponsor,  Member or combination  thereof.  Buying Group revenues are recorded at
the total amount billed to  participating  Providers and recognized in the month
the  merchandise  is  shipped.  Vision  Provider  fee  revenue  is based  upon a
percentage of materials sold by certain  participating  providers  under certain
plans.

RESULTS OF OPERATIONS:

     The Company's  total service  revenues  totaled  $2,439,298 for the quarter
ended  August 31,  1998,  compared to  $1,811,212  for the same period in fiscal
1997,  representing an increase of $628,086  (35%).  The increase is principally
due to a vision  plan  Sponsor  who has  increased  the level of  benefit of the
Cardholders,  and the resulting  fees,  over the prior year, and a second vision
plan Sponsor who added approximately 33,000 Cardholders during May 1998.

     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 to Sponsors  depending on whether
the  benefit  is  funded  in part or whole by the plan  Sponsor.  A  substantial
portion of the  Company's  Cardholder  base is derived from a limited  number of
Sponsors.  The Company's four largest Sponsors  accounted for  approximately 80%
and 77% of the total  administration  fee revenue for the quarters  ended August
31, 1998 and 1997, respectively.

     Administration   fees  from  the  Company's  vision  and  hearing  programs
accounted for $1,691,887  (69%) and $1,057,207  (58%) of total service  revenues
during the  quarters  ended August 31, 1998 and 1997,  respectively.  There were
approximately  794,000  vision and 6,000  hearing  Cardholders  as of August 31,
1998, compared to approximately  579,000 vision and 7,000 hearing Cardholders as
of August 31,  1997.  The  increase  in vision and  hearing  revenue  during the
current quarter was largely the result of the two vision plan Sponsors mentioned
above.  The other changes in the number of vision and hearing  Cardholders  were
due to Sponsors' employee or Member fluctuations.

     Vision  provider fee revenue  increased by $10,587 (40%) during the quarter
ended  August 31,  1998,  as  compared to the same  period in fiscal  1997.  The
increase in vision  provider  fee revenue  resulted  from an increase in Members
participating in a Plan under which the Providers are required to pay the fee.

                                       -7-
<PAGE>
     Administration  fees  from  the  Company's  dental  program  accounted  for
$296,785 (12%) and $297,389 (16%) of total service  revenues during the quarters
ended August 31, 1998 and 1997,  respectively.  There were approximately 162,000
and 124,000 dental cardholders as of August 31, 1998 and 1997, respectively. The
Company's  dental  program  revenue has remained  relatively  the same while the
number of dental Cardholders has increased due to pricing  differences among the
different plan benefits, as discussed above. The changes in the number of dental
cardholders   were  due  to  the  addition  of  a  discount  plan  Sponsor  with
approximately  91,000  cardholders  and existing  Sponsors'  Member and employee
fluctuations.

     The Company  makes  available to its  Providers a buying group program that
enables the  Provider  to purchase  eyeglass  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 were $405,713 (17%) and $418,530 (23%)
for the quarters ended August 31, 1998 and 1997, respectively.

     Cost of  services  were  $1,832,672  (75%)  and  $1,382,649  (76%)  for the
quarters  ended August 31, 1998 and 1997,  respectively.  These costs  primarily
relate to servicing Members,  provider network  development,  and Sponsors under
the Company's vision,  hearing, dental and chiropractic benefit programs as well
as the cost of frames that are sold through the  Company's  buying group program
as  discussed  above.  The  Company  expects  the  cost of  services  to  remain
relatively   constant  as  a  percentage  of  total  service  revenues  for  the
foreseeable future,  based upon the anticipation that the current mix of managed
care and discount programs will continue.

     General and administrative  expenses were $237,884 (10%) and $227,139 (13%)
for the quarters ended August 31, 1998 and 1997,  respectively.  The decrease in
general and administrative  expenses, as a percentage of total service revenues,
in the quarter  ended August 31, 1998,  as compared to the same period in fiscal
1997  is  due  to  the  Company's  ability  to  maintain   approximately   level
expenditures while total service revenues increased.

     Selling and marketing  expenses  were $249,423  (10%) and $143,260 (8%) for
the quarters ended August 31, 1998 and 1997, respectively. 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  increase in expenses  during the current  period was
primarily due to the addition of personnel  involved in the Company's  sales and
marketing  activities  and the increase of commissions  directly  related to the
Company's  increased  administrative  fee revenues.  A significant amount of the
Company's  marketing  activities has been outsourced to management  consultants,
National Health Enterprises.

                                       -8-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     The Company had cash and cash  equivalents  of  $1,931,247 as of August 31,
1998,  compared to $993,610 as of May 31, 1998. The increase of $937,637 was due
primarily  to  the  Company's  ability  to  reduce  expenses,   increase  timely
collections  of accounts  receivable,  advantageously  time  payments to vendors
during the quarter and the exercise of stock options and warrants  during August
1998.  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 and cash provided from  operations is expected to allow the Company
to sustain operations for the foreseeable future.

     As of August 31,  1998,  the Company had  $1,265,229  of Accounts  Payable,
compared to $1,106,165 as of May 31, 1998. The increase is predominately  due to
claims  reserves of $973,077 as of August 31,  1998,  compared to $786,052 as of
May 31, 1998,  included in Accounts  Payable.  The reserves are for incurred but
not reported  claim  reimbursements  to  Providers  who  participate  in certain
managed care programs. As previously mentioned, the Company has seen significant
growth of managed  vision care revenues and the associated  claims.  The Company
believes this reserve is adequate.

     During fiscal 1998 the Company  retired the final  $189,000 of  Convertible
Subordinated Debentures,  due December 1, 1997, and all $160,000 of subordinated
notes payable to certain  affiliates due March 18, 1998,  with funds provided by
operations. Accordingly, there were no amounts listed as interest for Debentures
or Notes payable to stockholders during the current quarter on the Statements of
Cash Flows.

     The Company expects to pay dividends of approximately $51,715 on the Series
A Preferred on December 1, 1998.

YEAR 2000 COMPLIANCE

     The Year 2000 issue is the result of  computer  systems  that were  written
using  two  digits  rather  than  four  to  define  the  applicable  year.  This
programming  decision may prevent such systems from accurately  processing dates
occurring in the year 2000 and thereafter.  This could result in system failures
or in  miscalculations  causing a disruption of operations,  including,  but not
limited to, a temporary inability to process Member eligibility information,  to
process  claims  payments,  or to  engage in  routine  business  activities  and
operations.

    The Company has reviewed all internally  used software and believes that the
new systems that have  recently been  developed and are currently  under testing
and all other  critical  applications  are Year 2000  compliant.  Based upon its
current computer operations and systems  development,  the Company believes that
its risks  related to Year 2000  compliance  are  minimal.  The Company does not
presently  anticipate  that any additional  costs to address the Year 2000 issue
will have a  material  adverse  effect  on the  Company's  financial  condition,
results of operations or liquidity.

                                       -9-
<PAGE>
     The  Company is in the  process of  contacting  all vendors and clients who
forward data  electronically  to determine the extent of their compliance and to
plan accordingly.  The Company believes that all significant vendors and clients
have Year 2000 remediation  efforts  underway.  To the extent that the Company's
vendors and clients data is not Year 2000  compliant,  the Company's new systems
have been written with the flexibility to translate the data  accordingly into a
Year 2000  compliant  format.  Therefore,  the Company  believes  that its risks
related to Year 2000 compliance by vendors and clients are minimal.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

     Statement  of  Financial   Accounting  Standards  No.  130,  "Reporting  of
Comprehensive  Income"  establishes  standards  for  reporting  and  display  of
comprehensive  income  (all  changes  in  equity  during a period  except  those
resulting from investments by and distributions to owners) and its components in
financial  statements.  The  adoption  of this  statement  contains no change in
disclosure requirements for the Company.

     Statement of Financial  Accounting  Standards  No. 131,  "Disclosure  about
Segments of an Enterprise  and Related  Information"  establishes  standards for
reporting  information about operating segments in annual financial  statements,
selected  information about operating  segments in interim financial reports and
disclosures  about products and services,  geographic area and major  customers.
This  pronouncement will be required to be implemented in the year ended May 31,
1999 and may result in presenting more detailed  information in the notes to the
Company's consolidated financial statements.

                            PART II OTHER INFORMATION

Item 3. Defaults Upon Senior Securities

(b)  The Certificate of Designation for the Company's Class A, Senior  Nonvoting
     Cumulative  Convertible Preferred Stock, Series A, places restrictions upon
     the payment of  dividends  on the  Company's  Series 2 Preferred  Stock and
     Common Stock.  Accordingly,  the Company may not pay the quarterly dividend
     otherwise  scheduled  for payment  during  October  1998,  on shares of its
     Series 2  Preferred  Stock.  Such  dividend  is  cumulative  and the  total
     dividend  arrearage is $32,400,  or $5.40 per share,  as of  September  30,
     1998.

                                      -10-
<PAGE>
Item 5. Other Information

(a)  Retirement of Stock Information

     As previously disclosed in the Company's Form 10-KSB for the year ended May
     31, 1998,  filed on August 26, 1998,  the Company made the following  stock
     repurchases and retirements:

                                Series A Series 2 Total Purchase Price including
                                -------- -------- ------------------------------
        Date      Common Shares  Shares   Shares           Commissions
        ----      -------------  ------   ------           -----------
   June 15, 1998      46,500                                 $10,950
   June 24, 1998     123,441      2,620                      $45,000
   July 22, 1998                          60,000            $180,000
   July 28, 1998                           1,000              $3,000
  August 20, 1998                          2,800              $8,400

     Subsequent to the filing the  Company's  Form 10-KSB for the year ended May
     31, 1998, the Company made the following stock repurchases and retirements:

                                Series A Series 2 Total Purchase Price including
                                -------- -------- ------------------------------
      Date        Common Shares  Shares   Shares           Commissions
      ----        -------------  ------   ------           -----------
 August 28, 1998     931,888                                $400,712
September 3, 1998                           500               $1,500
September 8, 1998     17,000                                  $3,928
September 24, 1998                2,000                       $5,268
 October 8, 1998                  6,800                      $25,925

(b)  Exercise of Stock Options and Warrants

     As previously disclosed in the Company's Form 10-KSB for the year ended May
     31, 1998,  filed on August 26, 1998,  the following  individuals  exercised
     their stock  options or warrants as of August 24,  1998,  in the  following
     amounts at the following exercise prices per option or warrant:
<TABLE>
<CAPTION>
Option/Warrant Holder   Number of Options   Number of Warrants   Modified Exercise Price
---------------------   -----------------   ------------------   -----------------------
<S>                     <C>                  <C>                     <C>
Alan S. Cohn                1,054,750                                    $0.31
Alan S. Cohn                  700,000                                    $0.26
Kenneth L. Blum, Jr.        1,064,750                                    $0.31
Kenneth L. Blum, Jr.          700,000                                    $0.26
William L. Richter             50,000                                    $0.31
William L. Richter                               109,091                 $0.31
William L. Richter                                50,909                 $0.26
Richter & Co., Inc.            72,500                                    $0.31
Richter & Co., Inc.                              163,636                 $0.31
Richter & Co., Inc.                               76,364                 $0.26
William R. Cohen              100,000                                    $0.26
</TABLE>

                                      -11-
<PAGE>
     On August 28, 1998 the following individual exercised his stock options, in
     the following amount at the following exercise price per option:

<TABLE>
<CAPTION>
Option/Warrant Holder   Number of Options   Number of Warrants   Modified Exercise Price
---------------------   -----------------   ------------------   -----------------------
<S>                                   <C>                <C>                       <C>
Gerald L. Cohen              100,000                                      $0.26
</TABLE>

Item 6. Exhibits and Reports on Form 8-K

(a)  See Exhibit Index  following the  Signatures  page,  which is  incorporated
     herein by reference.

(b)  No reports on Form 8-K were filed during the quarter ended August 31, 1998.

                                      -12-
<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:     October 13, 1998           /s/ Neal A. Kempler
      --------------------           -------------------------------------------
                                     Neal A. Kempler, Vice President
                                     and Secretary



Date:     October 13, 1998           /s/ Joel H. Alperstein
      --------------------           -------------------------------------------
                                     Joel H. Alperstein, Director of Finance
                                     and Treasurer (Principal Financial Officer)

                                      -13-
<PAGE>
                               Avesis Incorporated
                                  Exhibit Index
                Form 10-QSB for the Quarter Ended August 31, 1998


Exhibit No.   Description                 Incorporated by Reference from the:
-----------   -----------                 -----------------------------------
11            Statement re: Computation   Earnings (Loss) per Share Computation,
              of per Share Earnings       see  Note 2 to the Notes to Condensed 
                                          Consolidated Financial Statements.

27            Financial Data Schedule     Filed herewith