UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
  

                 Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

         For the quarterly period ended June 30, 1998 OR

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

         For the transition period from _____________ to ___________

Commission File Number:    0-15352

                           US SERVIS, Inc.
       (Exact name of registrant as specified in its charter)

         DELAWARE                                    22-2467332
(State or other jurisdiction of      (I.R.S. Employer or Identification Number)
incorporation of organization)

       220 Davidson Avenue, Somerset, NJ                       08873
    (Address of Principal Executive Office)                 (Zip Code)

                            (732) 764-9898
        (Registrant's telephone number, including area code)


------------------------------------------------------------------------------
                       (Registrant's Former Name)

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_______

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                        Yes   _______             No _______

                  APPLICABLE ONLY TO CORPORATE ISSUERS
At August 10, 1998, the registrant had outstanding  6,355,683 outstanding shares
of Common Stock, $0.01 par value.


<PAGE>
                   US SERVIS, INC. AND SUBSIDIARIES

                                INDEX


                                                                       Page No.

PART I - FINANCIAL INFORMATION                                            1

         CONSOLIDATED BALANCE SHEETS AT JUNE 30, 1998 AND
         MARCH 31, 1998                                                   2

         CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
         THREE MONTHS ENDED JUNE 30, 1998 AND 1997                        3

         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
         EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 1998                  4

         CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
         MONTHS ENDED JUNE 30, 1998 AND 1997                             5-6

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      7-9

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS                             9-12


PART II - OTHER INFORMATION                                               13


SIGNATURES                                                                14




<PAGE>


                                     PART I

                              FINANCIAL INFORMATION


1.       Consolidated Financial Statements as at June 30, 1998

         The  consolidated  balance  sheet as of March 31, 1998 has been derived
         from the audited  Consolidated Balance Sheet contained in the Company's
         Form 10-K and is presented for comparative purposes. Certain items have
         been  reclassified  to  conform  to  the  current   presentation.   The
         accompanying  consolidated financial statements presume that users have
         read the audited  consolidated  financial  statements  of the preceding
         fiscal  year.  Accordingly,  footnotes  which would have  substantially
         duplicated such disclosures have been omitted.

         The interim  consolidated  financial statements reflect all adjustments
         which are, in the opinion of management, necessary for a fair statement
         of the results for interim periods presented.  Such interim adjustments
         consist  solely  of  normal  recurring  adjustments.   The  results  of
         operations for interim  periods are not  necessarily  indicative of the
         results to be expected for a full year.























                                    -1-
<PAGE>

                         US SERVIS, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
<TABLE>
<S>                                                         <C>           <C>
                                                               June 30,    March 31,
                                                                 1998        1998
                                                             -----------  ----------
                            ASSETS                           (UNAUDITED)
CURRENT ASSETS:
         Cash and equivalents                                 $4,065,000  $4,852,000
         Certificates of deposit                                 300,000     382,000
         Accounts receivable:
           Billed, less allowance for doubtful
            accounts of $705,000 and $690,000                  6,576,000   5,985,000
           Unbilled                                            2,354,000   2,157,000
         Prepaid and refundable income taxes                      11,000      14,000
         Prepaid expenses and other current assets               642,000     493,000
                                                              ----------  ----------
            Total Current Assets                              13,948,000  13,883,000
                                                              ----------  ----------
PROPERTY AND EQUIPMENT                                         1,867,000   1,764,000
                                                              ----------  ----------
OTHER ASSETS:
         Software technology, less accumulated amortization
           of $739,000 and $699,000                              272,000     288,000
         Goodwill, less accumulated amortization of $510,000
           and $485,000                                        3,042,000   3,066,000
         Accounts Receivable                                     146,000     170,000
         Other                                                   769,000     693,000
                                                              ----------   ---------
            Total Other Assets                                 4,229,000   4,217,000
                                                              ----------  ----------
                                                             $20,044,000 $19,864,000
                                                              ==========  ==========

                               LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
         Accounts payable                                       $859,000    $748,000
         Accrued payroll & benefits                              946,000     838,000
         Accrued restructuring charges                           286,000     289,000
         Accrued expenses for use of trade name                   84,000      62,000
         Other accrued expenses                                  822,000     977,000
         Deferred income                                         170,000     179,000
         Customers' deposits and other current liabilities       340,000     285,000
                                                              ----------  ----------
            Total Current Liabilities                          3,507,000   3,378,000
                                                              ----------  ----------
LONG-TERM LIABILITIES:
         Accrued restructuring charges - net of current portion  165,000     196,000
                                                              ----------  ----------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
         Convertible preferred stock, par value $.01 per share
           10,000,000 shares authorized, 2,500,000 issued 
           and outstanding (liquidation preference
          $12,037,000) at June  30, 1998                          25,000      25,000
         Common stock $.01 par value; 30,000,000 shares 
           authorized; 6,372,000 shares issued                    64,000      64,000
         Capital in excess of par value                       24,872,000  24,872,000
         Retained earnings (deficit)                          (7,538,000) (8,077,000)
         Subscription receivable                                (140,000)   (140,000)
         Note receivable - related party                        (852,000)   (395,000)
                                                              ----------  ----------
                                                              16,431,000  16,349,000
         Less Treasury Stock at cost: 16,000 shares               59,000      59,000
                                                              ----------  ----------
            Total Shareholders' Equity                        16,372,000  16,290,000
                                                              ----------  ----------
                                                             $20,044,000 $19,864,000
                                                              ==========  ==========
</TABLE>
See accompanying notes to consolidated financial statements.
                                       2  
<PAGE>
                   US SERVIS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (UNAUDITED)
<TABLE>
<S>                                     <C>              <C>

                                                THREE MONTHS ENDED
                                                     JUNE 30, 
                                          ---------------------------
                                             1998             1997
                                          ----------       ----------
REVENUES:
         Service fees                     $6,152,000       $5,893,000
         Software license fees                71,000          133,000
         Sales of equipment                    8,000            5,000
         Interest and other                  106,000           92,000
                                          ----------       ----------
                                           6,337,000        6,123,000
                                          ----------       ----------

EXPENSES:
         Cost of services                  4,914,000        4,434,000
         Cost of equipment sales               6,000            2,000
         Research and development            259,000          534,000
         Selling, general and administra   1,069,000        2,051,000
         Interest expense                      8,000           25,000
         Loan Impairment Charge (Reversa    (458,000)         284,000
                                          ----------       ----------
                                           5,798,000        7,330,000
                                          ----------       ----------

INCOME (LOSS) BEFORE INCOME TAXES            539,000       (1,207,000)

FEDERAL AND STATE INCOME TAXES                  -               -
                                          ----------       -----------
NET INCOME (LOSS)                            539,000       (1,207,000)
                                          ==========       ===========
EARNINGS PER SHARE
         BASIC                                  0.05            (0.22)
                                          ==========       ===========
         DILUTED                                0.04            (0.22)
                                          ==========       ===========


</TABLE>















See accompanying notes to consolidated financial statements

                            3
<PAGE>

                      US SERVIS, INC. AND SUBSIDIARIES
             CONSODIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
                         FOR THE THREE MONTHS ENDED JUNE 30, 1998
                                    (UNAUDITED)

<TABLE>
<S>                          <C>         <C>         <C>       <C>        <C>         <C>        <C>         <C>          <C>


                                                                                                       
                                 PREFERRED STOCK          COMMON STOCK     CAPITAL IN                NOTE
                               --------------------    ------------------  EXCESS OF   RETAINED  SUBSCRIPTION  RECEIVABLE - TREASURY
                                SHARES    PAR VALUE    SHARES   PAR VALUE  PAR VALUE   EARNINGS   RECEIVABLE  RELATED PARTY  STOCK
                               ---------  ---------   ---------  -------- ---------- -----------  ---------   -----------   --------

BALANCE, MARCH 31, 1998        2,500,000   $25,000    6,372,000  $64,000 $24,872,000 ($8,077,000) ($140,000)  ($395,000)   ($59,000)

THREE MONTHS ENDED
   JUNE 30, 1998
Reversal of loan 
 collateral impairment charge                                                                                  (457,000)

Net Income                                                                               539,000
                               ---------   -------    ---------   ------  ----------  -----------  ---------   ---------   ---------
BALANCE, JUNE 30, 1998         2,500,000   $25,000    6,372,000  $64,000 $24,872,000 ($7,538,000) ($140,000)  ($852,000)   ($59,000)
                               =========   =======    =========   ======  ==========  ===========  =========   =========   =========
</TABLE>



See accompanying notes to consolidated financial statements.


                                         4

<PAGE>

                                US SERVIS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)
<TABLE>
<S>                                                               <C>          <C> 
                                                                       THREE MONTHS ENDED
                                                                           JUNE  30,
                                                                    -----------------------
                                                                       1998        1997
                                                                    ---------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                                 $539,000   ($1,207,000)
  Adjustments to reconcile net income (loss) to net cash flows
    from operating activities:
      Depreciation and amortization of property and equipment        153,000       169,000
      Accrued interest on capitalized lease obligations                             10,000
      Amortization of software technology                             40,000        60,000
      Amortization of goodwill                                        24,000        24,000
      Amortization of convertible preferred issue costs                              9,000
      Provision for losses on accounts receivable                     15,000       154,000
      Fair value adjustment of collateral held for
               note receivable from related party                   (457,000)      284,000
      Changes in operating assets and liabilities-
               Accounts receivable, billed                          (606,000)   (1,298,000)
               Accounts receivable, unbilled                        (197,000)        -
               Prepaid and refundable income taxes                     3,000         -
               Prepaid expenses and other current assets            (149,000)       40,000
               Other assets                                          (52,000)      (39,000)
               Accounts payable                                      111,000         4,000
               Accrued payroll & benefits                            108,000       234,000
               Accrued expenses for use of trade name                 22,000       (62,000)
               Other accrued expenses                               (155,000)        6,000
               Accrued restructuring                                 (34,000)     (174,000)
               Deferred income                                        (9,000)     (114,000)
               Customer deposits and other current liabilities        55,000         2,000
                                                                    ---------   -----------
                   Net cash flows from operating activities:        (589,000)   (1,898,000)
                                                                    ---------   ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Maturity of certificate of deposit                                  82,000         -
  Increase in software technology                                    (24,000)     (103,000)
  Purchase of property and equipment                                (256,000)     (279,000)
                                                                    ---------    ---------- 
                   Net cash flows from investing activities         (198,000)     (382,000)
                                                                    ---------   -----------
NET CHANGE IN CASH AND EQUIVALENTS                                  (787,000)   (2,280,000)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                          4,852,000     8,063,000
                                                                   ---------    -----------
CASH AND EQUIVALENTS, END OF PERIOD                               $4,065,000    $5,783,000
                                                                   =========    ===========










See accompanying notes to consolidated financial statements.

                                    5
<PAGE>

                                US SERVIS, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED)
                                           (concluded)
                                                                     THREE MONTHS ENDED
                                                                           JUNE  30,
                                                                    ----------------------
                                                                       1998        1997
                                                                    --------    ----------    

SUPPLEMENTAL INFORMATION:
  Interest paid                                                  $       -          25,000
                                                                 ===========      ========
  Income taxes paid                                                    7,000      $   -
                                                                 ===========      ========

</TABLE>
























See accompanying notes to consolidated financial statements.

                                    6
<PAGE>
                        US SERVIS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1998
                                   (UNAUDITED)




Note A - Basis of Presentation:

The  consolidated  financial  statements  include all the accounts of US SERVIS,
Inc.  and its  wholly-owned  subsidiaries  (collectively,  the  "Company").  All
significant intercompany transactions have been eliminated.


Note B - Nature of Business:

The Company is a provider of  outsourced  business  and  information  management
services to  physicians,  physician  networks,  hospitals  and  ambulatory  care
centers  associated with integrated  delivery systems.  The Company's  principal
focus is providing billing and accounts  receivement  management  services.  The
Company,  through a strategic  alliance,  has expanded its product  offerings to
include the  implementation of electronic  medical records systems.  The Company
has also  historically  been a provider of certain  third  party  administrative
services to a managed  care  organization  and of clinical  information  systems
products to  hospitals.  The Company is phasing  out of these  activities.  (See
Notes 2 and 9 to the Consolidated Financial Statements as of March 31, 1998).


Note C - Earnings Per Share:

In  February  1997,  the FASB  issued SFAS No.  128,  EARNINGS  PER SHARE.  This
Statement  established  new standards for computing and presenting  earnings per
share ("EPS"). The statement requires dual presentation of basic and diluted EPS
on the face of the income statement for entities with complex capital structures
and requires a reconciliation  of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. The
following  is a  reconciliation  of the  numerators  and  denominators  for  the
computation of basic and diluted  earnings per share (in  thousands,  except per
share amounts):


                                   7
<PAGE>



                                                    Three Months Ended
                                                          June 30,
                                                   --------------------
                                                    1998            1997
                                                  --------      ------------
       Basic earnings per share  
         Numerator
         Net income (loss)                        $539,000      ($1,207,000)
         Less preferred dividends                  235,000          217,000
                                                  --------       -----------
         Income (loss) for common                  304,000       (1,424,000)
                                                  --------       -----------
         Denominator
         Weighted average number of
         common shares outstanding               6,356,000        6,351,000
                                                 ---------        ----------
         Basic EPS                                   $0.05           ($0.22)
                                                 ---------        ----------
         Diluted earnings per share
         Numerator
         Income (loss) for common                  304,000       (1,424,000)
                                                 ---------       ----------- 
         Denominator
         Weighted average number of
         common shares outstanding               6,356,000        6,351,000
         Common equivalents of -
         Warrants                                  369,000
         Stock options                             518,000
                                                 ---------        ----------
         Total shares                            7,243,000        6,351,000
                                                 ---------        ----------
         Diluted EPS                                 $0.04           ($0.22)
                                                 ---------        ----------

Note D - Subsequent Events:

On July  20,  1998,  the  Company  entered  into an  Agreement  of  Merger  (the
"Agreement")  with HBO & Company,  a  Delaware  corporation  ("HBO"),  and HBO &
Company of Georgia,  a Delaware  corporation ("HBO Sub"),  pursuant to which the
Company will be merged with and into HBO sub (the "Merger") and the stockholders
of the  Company  will  receive  for each share of capital  stock of the  Company
(including the Company's Series A Preferred Stock,  Series B Preferred Stock and
Common Stock, each $.01 per share par value) a fraction of a share of HBO Common
Stock,  $.05 per share par  value,  ("HBO  Common  Stock") to be  determined  by
dividing $50 Million by the product of the Market Value (as hereinafter defined)
and the Fully Diluted Shares (as hereinafter defined).

Consummation of the Merger is subject to the  satisfaction or waiver of numerous
conditions,  including without  limitation,  the following:  (i):  expiration or
termination  of  the  waiting  period  under  the  Hart-Scott-Rodino  Anti-Trust
Improvements  Act of 1976,  as amended;  (ii)  approval of the Agreement and the
Merger  by the  stockholders  of the  Company;  (iii) the  effectiveness  of the
registration  statement filed by HBO with the Securities and Exchange Commission
covering  the  shares  of HBO  Common  Stock to be issued  in the  Merger;  

                                      8
<PAGE>
(iv) accuracy of each party's respective representations and warranties and the
fulfillment  of their  respective  covenants  set  forth in the  Agreement;  (v)
absence  of any  change  or  changes  in the  business,  properties,  rights  or
operations of the Company which, individually or in the aggregate, constitutes a
material adverse effect (as such term is defined in the Agreement); (vi) receipt
of an opinion of each  party's tax counsel  that the Merger  qualifies  as a tax
free reorganization; and (vii) receipt of an opinion of each party's independent
accountants that the Merger may be accounted for as a "pooling of interests." In
addition,  the Company and HBO have certain  rights to terminate  the  Agreement
including,  if the  conditions  are not  satisfied or waived,  the Merger is not
consummated  by November 15, 1998, or if the Market Value of HBO Common Stock is
less than $23.50 per share.

Certain  stockholders  of the  Company  holding  shares of capital  stock of the
Company  representing  approximately 40% of the outstanding voting capital stock
of the Company have entered into Voting  Agreements with HBO and HBO sub to have
their shares voted in favor of the Merger.

The Company expects the Merger to be consummated on or about September 30, 1998.

The failure of the Merger to be consummated would have a material adverse effect
on the financial condition, result of operations and business of the Company. In
December,  1996 the Company  entered into a strategic  alliance with IDX Systems
Corporation  ("IDX"), a software systems provider to larger physician  networks.
The IDX  alliance was to have been  beneficial  to the Company in its efforts to
further  penetrate  the  physician  network  market  through the user or the IDX
software  which is  favored by many  larger  physician  networks.  While the IDX
alliance  did not  contribute  significantly  to the Fiscal 1998  revenues;  the
Company  believes it would have been an  important  relationship  for the future
growth  of the  Company's  physician  network  business  and the  Company's  new
business  generation  will be adversely  affected by such  termination.  Shortly
after the  announcement  of the Merger,  IDX  advised  the Company  that IDX was
terminating  the  strategic  alliance  because  as a result of the  Merger,  the
Company would become part of HBO, whose business is similar to IDX's.  Under the
terms of the  agreement,  the  termination by IDX does not constitute a material
adverse effect giving HBO the right to terminate the Agreement. In the event the
Merger is not consummated for any reason,  the Company believes that a strategic
alliance  similar to the IDX alliance would be critical to the Company's  future
growth in its  outsourcing  business for the physician  network  market,  and no
assurance  can be  given  that the  Company  would be able to  establish  such a
strategic alliance.

In addition,  in the event the Merger is not  consummated  the Company will have
incurred expenses in connection with the Merger of approximately $1.3 million.

As used above, the following terms shall have the meanings set forth below.

(i)      "Fully  Diluted  Shares"  means the total  number of shares of  Company
         Common Stock issued and outstanding  immediately prior to the effective
         time of the  Merger  ("Effective  Time"),  plus the number of shares of
         Company Common Stock useable pursuant to all options, warrants or other
         rights  which  permit  the holder  thereof  to acquire or convert  into
         shares of Company  Common Stock  outstanding  immediately  prior to the
         Effective Time.

(ii)     "Market Value" shall mean the average  closing price per share reported
         by Nasdaq (or if there is no sale on such date then the average between

                                          9
<PAGE>

         the  closing  bid and ask  prices  on any such  day) for  shares of HBO
         Common Stock during the twenty (20) consecutive  trading days ending on
         the third  trading  day  prior to the date of the  Special  Meeting  of
         stockholders of the Company held to approve the Merger.


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


                                     GENERAL


For the  quarter  ended  June 30,  1998,  the  Company  reported  net  income of
$539,000.  This  marks  the  Company's  third  consecutive  profitable  quarter.
Management  is  encouraged  by  the  Company's   continued   improved  financial
performance.  During the first  four (4)  months of Fiscal  1999 a great deal of
time was  devoted to  negotiating  the  Agreement  of Merger with HBO & Company.
Management  strongly supports the pending merger with HBO & Company and believes
it is in  the  best  interests  of the  Company's  shareholders,  customers  and
employees.(See Note D to the consolidated Financial Statements.)


                     LIQUIDITY AND CAPITAL RESOURCES


                                   June 30, 1998          March 31, 1998
                                   -------------          -------------- 
Current Assets                      $13,948,000             $13,883,000
Current Liabilities                   3,507,000               3,378,000
                                    -----------             -----------
Working Capital                      10,441,000              10,505,000
Working Capital Ratio to 1              4.0                     4.1


During the three months ended June 30, 1998,  Working Capital  decreased $64,000
from  $10,505,000  to  $10,441,000.  Cash  and  Equivalents  decreased  $787,000
primarily due to an increase in accounts receivable of $788,000.

The Company  anticipates  that available cash and cash flow from operations will
be sufficient to meet the Company's  operating and capital  requirements for the
next twelve months.

As discussed  in the  Company's  Annual  Report on Form 10-K for the fiscal year
ended  March 31,  1998,  the  Company  is  presently  working  on (i) making its
Infinity  and  Infinity  X  information  systems  year 2000  compliant  and (ii)
replacing  its  OPMS/Alliant  information  system  with an  alternative  system.
Infinity, Infinity X and OPMS/Alliant are the principal information systems used
by the Company.  The Company has estimated that the costs associated with making
these systems year 2000 compliant are approximately $350,000.

                                    10
<PAGE>



                              RESULTS OF OPERATIONS

                                    REVENUES

                                             Three Months Ended June 30,
                                            1998                 1997
                                         ----------           ----------
    Service fees                         $6,152,000           $5,893,000
    Software license fees                    71,000              133,000
    Sales of equipment                        8,000                5,000
    Interest and other                      106,000               92,000
                                         ----------           ----------
                                         $6,337,000           $6,123,000


For the three months  ended June 30,  1998,  the  Company's  revenues  increased
$214,000,  or 3.5%,  when  compared to the same period in the prior fiscal year.
Contributing to this increase were increases in service fees of $259,000,  sales
of equipment of $3,000 and interest and other of $14,000.  These  increases were
partially offset by a decrease in software licenses fees of $62,000.

Contributing  to the increase in revenues  from  service fees were  increases of
$542,000 from hospital  services and $1,274,000 from physician  services.  These
increases  were partially  offset by a $1,462,000  decrease in revenues from TPA
services  provided  to  MetroPlus  (See  Note  9 to the  Consolidated  Financial
Statements included in Form 10K for the fiscal year ended March 31, 1998), and a
$95,000 decrease in revenues from discontinued clinical services.


                                    EXPENSES


                                                Three Months Ended June 30,
                                                   1998               1997
                                               ----------          ----------
    Cost of services                           $4,914,000          $4,434,000
    Cost of equipment sales                         6,000               2,000
    Research and development                      259,000             534,000
    Selling, general and administrative         1,069,000           2,051,000
    Interest expense                                8,000              25,000
    Loan impairment charge (reversal)            (458,000)            284,000
                                               ----------          ---------- 
                                               $5,798,000          $7,330,000


For the three months  ended June 30,  1998,  the  Company's  expenses  decreased
$1,532,000, or 20.9%, when compared to the same period in the prior fiscal year.
Contributing  to this  decrease  were  decreases  in  research  and  development
expenses of $275,000,  selling,  general and administrative expenses of $982,000
and interest  expense of $17,000;  plus a net  reduction in the loan  impairment


                                        11
<PAGE>
charge  (reversal)  during the current period  compared to the charge during the
same period of the prior fiscal year in the amount of $742,000.  These decreases
were  partially  offset by increases in cost of services of $480,000 and cost of
equipment sales of $4,000.

The major  components  of the  increase  in cost of  services  were  $712,000 of
additional  expenses for services to University  Physician  Associates  ("UPA"),
approximately  $225,000 for services to four new physician  clients and $145,000
for services to one new hospital  client.  These increases were partially offset
by a $496,000  decrease in the cost of TPA  services  provided to  MetroPlus,  a
$75,000 decrease related to the  implementation  of MedicaLogicTM for one of our
clients and other net decreases of $31,000.

The  decrease  in selling,  general and  administrative  expense  resulted  from
planned  decreases in sales and  marketing  expenses of  $246,000,  decreases in
legal fees  (primarily  related to  MetroPlus)  of $233,000,  a reduction in the
allowance  for  doubtful  accounts of $139,000,  decreases in senior  management
compensation  of $107,000 as the result of pay reductions and the elimination of
one  position  effective  August 15,  1997,  a reduction  of  occupancy  cost of
$76,000,  other staff  reductions  of $58,000,  a decrease  in  amortization  of
$29,000 and other net decreases of $94,000.

On June 30, 1998, the Company recorded a reversal of loan impairment  charges in
the amount of $458,000  representing  the increase  during the quarter in market
value of the 252,557 shares of the Company's common stock held as security for a
loan made in connection  with an acquisition in 1991. This reversal was based on
the closing  price of the  Company's  common stock on June 30,  1998,  which was
$3.375 per share.  If and to the extent that the closing  stock price at the end
of any  subsequent  quarter is greater  than  $3.375,  there will be  additional
reversals of the loan impairment charge.


                                NET INCOME (LOSS)


For the three  months ended June 30,  1998,  the Company  reported net income of
$539,000  compared to a net loss of $1,207,000 during the same period last year.
After provisions for preferred dividends, the Company's net income per share was
$0.04 (diluted) compared to a net loss per share of $0.22 last year.



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<PAGE>


                           PART II - OTHER INFORMATION


Item 1       -    Litigation

                  Other  Litigation  There  has been no  material  change to the
                  status  of the  other  litigation  described  in Item 3 of the
                  Company's  report on Form 10-K for the fiscal year ended March
                  31, 1998.


Item 2       -    Changes in Securities

                  None

Item 3       -    Defaults Upon Senior Securities

                  None


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

                  None

Item 5       -    Other Information

                  None


Item 6       -    Exhibits and Reports on Form 8-K

                  (a)      Exhibits:  The  Financial  Data  Schedule for the 
                           quarter  ending June 30, 1998.

                  (b)      Reports  on Form  8-K:  No  report  on Form 8-K was 
                           filed during the quarter ending June 30, 1998.


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<PAGE>


                                   SIGNATURES


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



                                              US SERVIS, INC.
                                               (Registrant)


                                                 /S/ Graham O. King
Date:        August 11, 1998               By:  ________________________ (L.S.)
                                                      Graham O. King
                                                 Chairman of the Board and
                                                  Chief Executive Officer

                                                /S/ Robert E. Van Metre
Date:        August 11, 1998               By:  _________________________(L.S.)
                                                     Robert E. Van Metre
                                               Principal Accounting Officer and
                                                    Chief Financial Officer











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