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, 1997
                                      ----------------------------------------


   _   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 North Third Street, Suite 300       Phoenix, Arizona  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 January
    10, 1998 was 4,061,420.

    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, 1997
                                   (Unaudited)
<TABLE>
<S>                                                                                       <C>        
                                                ASSETS
                                                ------
Current assets:
    Cash and cash equivalents                                                             $   759,660
    Receivables, net                                                                          346,543
    Prepaid expenses and other                                                                287,885
                                                                                          -----------
         Total current assets                                                               1,394,088
    Property and equipment, net                                                               379,329
    Deferred debenture issuance costs, net                                                        150
    Deposits and other assets                                                                 259,900
                                                                                          -----------
                                                                                          $ 2,033,467
                                                                                          ===========
                                                                                          
                                 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 ------------------------------------
Current liabilities:                                                                      
    Accounts payable                                                                      $   768,645
    Accrued expenses-                                                                     
       Compensation                                                                            49,458
       Rent                                                                                    26,829
       Other                                                                                   23,862
    Capital lease, short-term                                                                  10,288
    Notes payable to stockholders                                                             160,000
    Convertible subordinated debentures                                                       189,000
    Less unamortized debenture discount                                                          (159)
    Deferred income                                                                             7,301
                                                                                          -----------
           Total current liabilities                                                        1,235,224
Accrued rent                                                                                   77,749
Capital lease, long-term                                                                       36,102
                                                                                          -----------
           Total liabilities                                                                1,349,075
                                                                                          -----------
                                                                                          
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; 4,090,420 shares issued and outstanding                             40,904
    Additional paid-in capital                                                              9,946,758
    Accumulated deficit                                                                    (9,307,152)
                                                                                          -----------
           Net stockholders' equity                                                           684,392
                                                                                          -----------
                                                                                          $ 2,033,467
                                                                                          ===========
</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, 1997 AND 1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                           Quarters Ended                        Six Months Ended
                                     November 30     November 30            November 30    November 30
                                    ----------------------------           ----------------------------
                                         1997            1996                  1997            1996
                                    -------------   ------------           ------------   -------------
<S>                                 <C>             <C>                    <C>            <C>          
Service revenues:
    Administration fees             $   1,553,780   $    764,385           $  2,918,492   $   1,676,469
    Buying group sales                    387,079        370,892                805,609         759,521
    Provider fees                          28,330         34,284                 54,796          68,336
    Other                                   1,103         30,701                  2,607          44,978
                                    -------------   ------------           ------------   -------------

       Total service revenues           1,970,292      1,200,262              3,781,504       2,549,303

Cost of services                        1,467,039        875,251              2,849,689       1,764,060
                                    -------------   ------------           ------------   -------------

       Income from services               503,253        325,011                931,815         785,244

General and administrative expenses       230,608        251,979                457,748         506,944

Selling and marketing expenses            189,824        124,566                333,084         290,951
                                    -------------   ------------           ------------   -------------

     Income (loss) from operations         82,821        (51,534)               140,983         (12,651)
                                    -------------   -----------            ------------   -------------

Non-operating income (expense):
    Other income (expense)                (25,373)           (79)               (23,662)            (79)
    Interest income                         8,664          5,995                 17,417          12,233
    Interest expense                       (7,776)        (7,359)               (15,161)        (14,744)
    Gain/(loss) on asset disposal          (2,124)           -0-                 (2,124)            -0-
                                    -------------   ------------           ------------   -------------

     Net non-operating income
     (expense)                            (26,609)        (1,443)               (23,530)         (2,590)
                                    -------------   ------------           ------------   -------------

     Net income (loss)              $      56,212   $    (52,977)          $    117,453   $     (15,241)
                                    =============   ============           ============   =============

Net income (loss) per common
share                               $       (0.01)  $      (0.03)          $      (0.01)  $       (0.05)
                                    =============   =============          ============   =============

Weighted average common
shares and equivalents
outstanding                             4,097,673      4,100,420              4,099,054       4,100,420
                                    =============   ============           ============   =============
</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, 1997 AND 1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                        1997              1996
                                                                   -------------      ------------
<S>                                                                <C>                <C>          
Cash flows from operating activities:
    Net income                                                     $     117,453      $    (15,241)
                                                                   -------------      ------------
    Adjustments to reconcile net income to net
      cash provided by (used in) operating activities:
      Depreciation and amortization                                       54,937            84,542
      Loss on fixed asset disposal                                         2,124               -0-
      Provision for losses on accounts receivable                            -0-              (149)
      Changes in assets and liabilities:
        (Increase) decrease in receivables                                (6,187)           83,349
        (Increase) decrease in prepaid expenses                         (174,271)           36,158
        (Increase) decrease in other assets                              (74,861)              -0-
        Increase in accounts payable                                     304,268            55,175
        (Decrease) in accrued expenses                                   (69,092)           (2,683)
        (Decrease) in deferred income                                    (15,930)           (5,991)
        Increase in accrued rent                                          12,534             4,899
                                                                   -------------      ------------
             Total adjustments                                            33,522           255,300
                                                                   -------------      ------------

        Net cash provided by operating activities                        150,975           240,059
                                                                   -------------      ------------

Cash flows from investing activities:
    Proceeds from dispositions of property and equipment                   5,000               -0-
    Purchases of property and equipment                                 (257,740)          (70,939)
                                                                   -------------      ------------
        Net cash (used in) investing activities                         (252,740)          (70,939)
                                                                   -------------      ------------

Cash flows from financing activities:
    Capital lease                                                         48,002               -0-
    Repayment of capital lease                                            (1,612)              -0-
    Repurchase of capital stock                                           (2,500)              -0-
                                                                   -------------      ------------
        Net cash provided by financing activities                         43,890               -0-
                                                                   -------------      ------------

        Net (decrease) increase in cash and cash equivalents             (57,875)          169,120

Cash and cash equivalents, beginning of period                           817,535           436,083
                                                                   -------------      ------------

Cash and cash equivalents, end of period                           $     759,660      $    605,203
                                                                   =============      ============




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

(a) Interest paid during the period -
    Debentures                                                             8,978               -0-
    Notes payable to stockholders                                            -0-               -0-
</TABLE>
        The accompanying notes are an integral part of these statements.
                                      - 4 -
<PAGE>
                               AVESIS INCORPORATED
                          NOTES TO FINANCIAL STATEMENTS
                           NOVEMBER 30, 1997 AND 1996
                                   (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 adjustments  included in the accompanying
    interim  financial  statements  include all adjustments,  which are all of a
    normal recurring nature, necessary in order to make the financial statements
    not misleading,  and present fairly the Company's financial position and the
    results of operations and cash flows for the periods indicated.

    The results of operations  for the period ended  November 30, 1997,  are not
    necessarily indicative of the results to be expected for any other period or
    the complete fiscal year.


2. For the quarter and six months ended November 30, 1997, 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 Operation
         For the Quarter and Six Months Ended November 30, 1997 and 1996

The statements contained in this discussion and analysis regarding  management's
anticipation of adequacy of cash for continuing operations, adequacy of reserves
for claims, sustained viability of the Company and continued positive cash flows
constitute  "forward-looking"  statements  within  the  meaning  of the  Private
Securities Litigation Reform Act of 1995. These  forward-looking  statements are
based upon assumptions that 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,  demand for  services,
stability  of costs,  retention  of  sponsors  and  cardholders  enrolled in the
Company's benefit programs, and 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,  Blue Cross and Blue Shield organizations,  corporations,
unions and various associations ("Sponsors"), to realize savings on purchases of
products and services  through  networks of providers such as  ophthalmologists,
optometrists,   opticians,  hearing  specialists,   dentists  and  chiropractors
("Providers").

The  Company  derives its  administration  fee revenue  from plan  Sponsors  who
customarily  pay a set fee per  member per month.  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  as the  total  amount  billed  to  participating
Providers.  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  $1,970,292 and $3,781,503 for the
quarter and six months  ended  November  30, 1997,  compared to  $1,200,262  and
$2,549,303 for the same periods in the prior year,  representing  an increase of
$770,030 (64%) and $1,232,200 (48%),  respectively.  The increase is principally
due to the  addition of a vision plan  Sponsor  who added  approximately  95,000
Cardholders  during  January  1997 and a second  vision  plan  Sponsor who added
approximately  130,000  Cardholders  during July 1997.  As of November 30, 1997,
these two Sponsors have approximately 233,000 Cardholders.

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 administration fees from vision and hearing programs accounted for
$1,228,662  (62%) and $472,706 (39%) of total service  revenues for the quarters
ended  November  30,  1997 and  1996,  respectively,  and  $2,285,869  (60%) and
$973,997  (38%) of total service  revenues for the six months ended November 30,
1997 and 1996,  respectively.  There were approximately 629,000 vision and 6,600
hearing cardholders as of November 30, 1997,  compared to approximately  328,000
vision and 40,000  hearing  cardholders as of November 30, 1996. The increase in
vision and hearing  revenue  during the  current  quarter and six months was the
result of the two new vision plan  Sponsors  mentioned  above.  The  decrease in
hearing  cardholders was largely due to the  discontinuation of services for one
hearing plan Sponsor with approximately  32,000 total  cardholders.  The loss of
hearing  cardholders did not have a material  impact on total service  revenues.
The other  changes in the number of vision and hearing  cardholders  were due to
Sponsors' employee or Member fluctuations in the normal course of business.
                                       -6-
<PAGE>
Vision  provider fee revenue  declined by $5,954 (17%) and $13,540  (20%) during
the quarter and six months  ended  November  30,  1997,  as compared to the same
periods in fiscal 1996 largely due to a modification of the Company's agreements
with its  Providers  in response to  competitive  pressures.  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.

Administration  fees from the Company's  dental  program  accounted for $324,847
(16%) and $290,778  (24%) of total service  revenues  during the quarters  ended
November 30, 1997 and 1996,  respectively  and $622,236 (16%) and $700,669 (27%)
of total  service  revenues  during the six months  ended  November 30, 1997 and
1996,   respectively.   There  were  approximately  127,000  and  72,000  dental
cardholders as of November 30, 1997 and 1996, respectively. The Company's dental
program revenue has increased  during the current  quarter  compared to the same
period in the prior  fiscal  year,  and the  number  of dental  cardholders  has
increased.  Due to pricing  differences  among the different plan  benefits,  as
discussed above, revenue did not increase at a rate proportional to the increase
of  cardholders,  which accounted for the decrease in revenue in the current six
month period.  The changes in the number of dental  cardholders  were due to two
new Sponsors and significant increases in two other Sponsors' Members.

The Company makes available to its vision  Providers a buying group program that
enables  the  Provider  to  order  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  accounted  for  $387,079  (20%) and
$370,892  (31%) of total service  revenues for the quarters  ended  November 30,
1997 and 1996,  respectively,  and $805,609  (21%) and  $759,521  (30%) of total
service  revenues  for  the  six  months  ended  November  30,  1997  and  1996,
respectively.

Cost of services were $1,467,039 (74%) and $875,251 (73%) for the quarters ended
November 30, 1997 and 1996,  respectively,  and $2,849,689  (75%) and $1,764,060
(69%) for the six months ended November 30, 1997 and 1996,  respectively.  These
costs relate to servicing Members,  Providers,  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  increase in cost of services  was  primarily  due to the payment of
benefits  for Members of the new plan  Sponsors of  approximately  $549,000  and
$981,000,  for the quarter and six months ended November 30, 1997, which did not
exist  in the  prior  year.  The  Company's  cost  of  services  increased  as a
percentage of total service revenues due to a shift in product mix from discount
to managed care programs which have greater  associated  costs due to additional
customer service and claims payment functions.

General and  administrative  expenses were $230,608 (12%) and $251,979 (21%) for
the quarters ended November 30, 1997 and 1996, respectively,  and $457,748 (12%)
and  $506,944  (20%)  for the six  months  ended  November  30,  1997 and  1996,
respectively. The decrease in general and administrative expenses in the quarter
and six months  ended  November  30,  1997,  as compared to the same  periods in
fiscal 1996 is due to a decrease in rent expense  resulting  from the relocation
of the Company's principal office and a decrease in depreciation  expense as the
Company  abandoned a significant  portion of software  prior to the start of the
current year.

Selling and marketing  expenses were $189,824  (10%) and $124,566  (10%) for the
quarters ended November 30, 1997 and 1996,  respectively,  and $333,084 (9%) and
$290,951   (11%)  for  the  six  months  ended   November  30,  1997  and  1996,
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,  for a cost lower than the Company  incurred  when  performing  the
functions  internally.  Effective March 18, 1998, the cash  compensation paid to
National  Health  Enterprises  will increase by $50,000 per year to $250,000 per
year.

Other  expense of $25,373 for the quarter  ended  November 30, 1997 includes the
write-off of  unamortized  moving  expenses of $25,835  related to the Company's
previous  relocation of the principal office. The Company capitalized $14,588 of
moving  expenses,  included  in  deposits  and  other  assets,  related  to  the
relocation of the Company's  principal office during October 1997, which will be
amortized over the five year life of the current lease agreement.
                                       -7-
<PAGE>
Liquidity and Capital Resources
-------------------------------

The Company had cash and cash  equivalents  of $759,660 as of November 30, 1997,
compared  to  $817,535  as of May 31,  1997.  The  decrease  of $57,875  was due
primarily to the Company's financing of the development of new software systems,
and the  purchase of  necessary  new computer  hardware,  from cash  provided by
operations. As of November 30, 1997, the Company had paid approximately $170,000
for  software  development  and  related  hardware  of the  projected  total  of
$250,000.  The project is anticipated to be completed and operational by the end
of the  Company's  fiscal  year.  Current  cash on hand and cash  provided  from
operations is expected to allow the Company to sustain  operations  for at least
the next twelve months.

As of November 30, 1997, the Company had $768,645 of Accounts Payable,  compared
to $279,085 in the prior  fiscal  year.  The  increase is  predominately  due to
reserves for claims of $375,500 in the current year for the two new Sponsors for
claim  reimbursements  to  Providers  who  participate  in  their  managed  care
programs.  The Company believes this reserve is conservative  and adequate.  The
remaining  increase  in  Accounts  Payable  was due to the  timing  of  invoices
received in the normal  course of  business.  The Company is current and in good
standing with its vendors.

As of November 30, 1997,  the Company had $189,000 of  Convertible  Subordinated
Debentures, less $159 of unamortized discount, due December 1, 1997 and $160,000
of subordinated  notes payable to  stockholders  due March 18, 1998. The Company
has  transmitted the required funds to the Trustee for payment of the Debentures
and has  reflected  the  transaction  as a prepaid  current asset on the Balance
Sheet as of November 30, 1997.
                                       -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  1998,  on shares  of its  Series 2
        Preferred Stock. The dividend is cumulative. The arrearage is $1,805,568
        as of November 30, 1997.

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

(a)     An annual  meeting of  stockholders  of the Company was held on December
        17, 1997.

(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:              2,906,377
                  Number of votes cast against:            106,361
                  Number of abstentions                          0
                  Number of non-votes                            0

Item 5.  Other Information - Retirement of Stock Information

        On November 5, 1997,  the Company  bought back and retired 10,000 shares
        of common stock,  reducing total  outstanding  shares to 4,090,420 as of
        November 30, 1997.  On December 16, 1997 and January 5, 1998 the Company
        bought back and retired 17,000 and 12,000 common  shares,  respectively,
        reducing total outstanding common shares to 4,061,420.

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  November 30,
        1997.  A report  on Form  8-K  dated  December  12,  1997  was  filed to
        disclose,  under Item 5 - Other  Events,  the extension and amendment of
        the Company's Management Agreement with National Health Enterprises.
                                       -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:     1/14/98                                  /s/ Neal A. Kempler
                                         ---------------------------------------
                                         Neal A. Kempler, Vice President
                                         and Secretary



Date:     1/14/98                                 /s/ Joel H. Alperstein
                                         ---------------------------------------
                                         Joel H. Alperstein, Director of Finance
                                         and Treasurer
                                         (Principal Financial Officer)
                                      -10-
<PAGE>
                                  Exhibit Index
                                       To
                               Avesis Incorporated
               Form 10-QSB for the Quarter Ended November 30, 1997


Exhibit No.    Description
-----------    -----------

11             Statement re: Computation of per Share Earnings    Filed herewith

27             Financial Data Schedule                            Filed herewith