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, 2000

                                                        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 000-19636

                                HEALTHCARE INTEGRATED SERVICES, INC.
                        (Exact name of registrant as specified in its charter)

         Delaware                                            22-3119929
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

1040 Broad Street, Shrewsbury, New Jersey                         07702
(Address of principal executive offices)                        (Zip Code)

                                             (732) 544-8200
                         (Registrant's telephone number, including area code)

         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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

         Class                               Outstanding at August  21, 2000
Common Stock, $.01 par value                         1,135,699 shares

                                                         1

<PAGE>



                HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES

                                                       INDEX

PART I.           FINANCIAL INFORMATION:                               PAGE

Item 1.           Financial Statements:

     Consolidated Balance Sheets -
         June 30, 2000 and December 31, 1999                              3

     Consolidated Statements of Income -
         Three and six months ended June 30, 2000 and 1999                4

     Consolidated Statement of Changes in Stockholders'
         Equity - For the six months ended June 30, 2000                  5

     Consolidated Statements of Cash Flows -
         Six months ended June 30, 2000 and 1999                          6

     Notes to Consolidated Financial Statements                           7

Item 2.           Management's Discussion and Analysis of                13
                  Financial Condition and Results of Operations

     3.           Quantitative and Qualitative Disclosure About          18
                  Market Risk

PART II.          OTHER INFORMATION

Item 5.           Other Information                                      19

Item 6.           Exhibits and Reports on Form 8-K                       19

SIGNATURES                                                               20


                                                         2

<PAGE>




                  HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS

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


                                                                                        June 30,           December 31,
Assets                                                                                   2000                  1999
------                                                                                  ------                -----
                                                                                      (Unaudited)
Current Assets:
   Cash and cash equivalents                                                        $     249,730          $   645,389
   Accounts receivable - net                                                           14,753,873           13,806,760
   Loan receivable                                                                              -               50,411
   Prepaid expenses and other                                                             367,452              226,752
                                                                                          -------              -------
                  Total current assets                                                 15,371,055           14,729,312
                                                                                       ----------           ----------
Property, Plant and Equipment - Net                                                     8,094,461            7,754,840
                                                                                        ---------            ---------
Deferred Tax Asset - Net                                                                2,543,926            2,494,184
                                                                                        ---------            ---------
Other Assets:
   Due from officer                                                                       264,125              264,125
   Deferred transaction and financing costs                                             1,036,050              905,676
   Other                                                                                  391,101              464,679
   Investment in Atlantic Imaging Group, LLC ("AIG")                                      215,291               94,785
   Goodwill - net                                                                      12,211,536           12,421,518
                                                                                       ----------           ----------
                  Total other assets                                                   14,118,103           14,150,783
                                                                                       ----------           ----------
Total Assets                                                                          $40,127,545          $39,129,119
                                                                                      ===========          ===========
Liabilities and Stockholders' Equity
Current Liabilities:
   Accounts payable and accrued expenses                                               $4,065,673           $2,538,156
   Current portion of capital lease obligations                                         1,066,709              766,338
   Current portion of note payable                                                      2,448,670            2,306,758
   Income taxes payable                                                                         -                6,475
                                                                                        ---------                -----
                  Total current liabilities                                             7,581,052            5,617,727
                                                                                        ---------            ---------
Noncurrent Liabilities:
   Capital lease obligations                                                            3,576,878            2,717,700
   Borrowings under revolving line of credit                                            3,425,829            3,251,360
   Note payable                                                                         9,063,666           10,324,538
                                                                                        ---------           ----------
                  Total noncurrent liabilities                                         16,066,373           16,293,598
                                                                                       ----------           ----------
Minority Interests                                                                        412,556              478,800
                                                                                          -------              -------
Commitments and Contingencies
Stockholders' Equity:
   Preferred stock, $.10 par value, 1,000,000 shares authorized:
      Series D 8% cumulative accelerating redeemable preferred stock, 633.64 shares
      outstanding at June 30, 2000 and December 31, 1999, respectively ($10,500
      per share liquidation preference)                                                        63                   63
   Common stock, $.01 par value:  50,000,000 shares authorized, 1,135,699
      outstanding at June 30, 2000 and December 31, 1999, respectively                     11,357               11,357
   Additional paid-in capital                                                          20,742,679           20,742,679
   Accumulated deficit                                                                 (4,686,535)          (4,015,105)
                                                                                       -----------          -----------
                  Total stockholders' equity                                           16,067,564           16,738,994
                                                                                       ----------           ----------
Total Liabilities and Stockholders' Equity                                            $40,127,545          $39,129,119

                                                                                      ===========          ===========
</TABLE>
                 See accompanying notes to consolidated financial statements



                                                         3

<PAGE>








                     HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF INCOME

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


                                                     Three Months Ended June 30,              Six Months Ended June 30,
                                                             (Unaudited)                             (Unaudited)
                                                       2000               1999                2000                1999
                                                       ----               ----                ----                ----

Revenues                                              $4,841,112         $5,750,799         $9,832,480          $11,773,301
                                                      ----------         ----------         ----------          -----------
OPERATING EXPENSES:
   Salaries                                            1,517,248          1,864,827          3,118,550            3,606,662
   Other operating expenses                            1,473,157          1,666,633          3,031,337            3,408,110
   Provision for bad debts                               404,378            116,256            819,894              255,248
   Consulting and marketing fees                          15,152            149,046            155,148              267,042
   Professional fees                                      70,728            106,900            170,249              283,638
   Depreciation and amortization                         711,251            770,198          1,630,561            1,572,607
   Interest                                              598,659            676,582          1,218,844            1,522,947
                                                         -------            -------          ---------            ---------
                                                       4,790,573          5,350,442         10,144,583           10,916,254
                                                       ---------          ---------         ----------           ----------
Income/(Loss)Before Minority Interests in
Joint Ventures and Income Taxes                           50,539            400,357           (312,103)             857,047
Equity earnings in AIG                                   259,899            (54,364)           274,229              (30,814)
Minority Interests in Joint Ventures                    (142,393)           (77,820)          (200,831)            (184,290)
                                                        ---------           --------          ---------            ---------
Income/(Loss) Before Income Taxes                        168,045            268,173           (238,705)             641,943
Income Tax (Benefit) Provision                            69,988           (520,446)           (21,554)            (821,264)
                                                          ------           ---------           --------            ---------
Net Income/(Loss)                                         98,057            788,619           (217,151)           1,463,207
Preferred Dividends                                      248,137            272,216            496,272              501,049
                                                         -------            -------            -------              -------
Net (Loss)/Income Available to Common

Shareholders                                           $(150,080)          $516,403          $(713,423)            $962,158
                                                       ==========          ========          ==========            ========
Net (Loss)/Income per Common Share -
Basic                                                    $(.13)               $.45             $(.63)               $.85
                                                         ======               ====             ======               ====
Weighted Average Common Shares
   Outstanding - Basic                                 1,135,699          1,135,699          1,135,699            1,135,699
                                                       =========          =========          =========            =========
Net (Loss)/Income per Common Share-
Diluted                                                  $(.13)               $.38             $(.63)               $.71
                                                         ======               ====             ======               ====

Weighted Average Common Shares                         1,135,699          2,052,308          1,135,699            2,058,717
Outstanding - Diluted                                  =========          =========          =========            =========


</TABLE>


      See  accompanying  notes  to  consolidated  financial statements.

                                                         4

<PAGE>




              HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (UNAUDITED)


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

                                                                                          Accumulated
                                                                              Additional  (Deficit)                    Total
                                                                                Paid-in    Retained   Unearned      Stockholders'
                                                                                Capital    Earnings  Compensation      Equity
                                    Preferred Stock        Common Stock
                                  Shares     Amount    Shares     Amount
BALANCE, JANUARY 1, 2000           634        $63     1,135,699   $11,357    $20,742,679  $(3,964,479)  $(50,626)     $16,738,994

Net (Loss)                                                                                   (217,151)                   (217,151)

Unearned compensation in
connection with stock option
grant

Amortization of unearned
compensation for stock options                                                                            41,993           41,993

Preferred dividends                                                                          (496,272)                   (496,272)
                                --------    --------  ---------   -------  -------------      --------   ---------       ---------

BALANCE, JUNE 30, 2000             634        $63     1,135,699   $11,357    $20,742,679  $(4,677,902)   $(8,633)     $16,067,564
                                ========    ========  =========   =======  =============  ============   ========     ===========

</TABLE>



         See  accompanying  notes  to  consolidated  financial statements.

                                                         5

<PAGE>




                         HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                                                                                Six Months Ended
                                                                                   June 30,
                                                                                 (Unaudited)
                                                                             2000                 1999
                                                                             ----                 ----
Cash Flows From Operating Activities:
  Net (loss)/income available to common shareholders                       $(713,423)          $962,158
  Adjustments to reconcile net (loss)/income available to common
  shareholders to net cash provided by operating activities:
      Depreciation and amortization                                        1,630,561          1,572,607
      Non-cash compensation charge                                            41,993             40,245
      Interests in joint ventures                                             80,324            184,290
      Allowance for doubtful accounts                                      1,118,000            403,000
Changes in Assets and Liabilities:
            Accounts receivable                                           (2,065,113)          (198,091)
            Prepaid expenses and other                                      (140,700)          (143,138)
            Deferred taxes                                                   (49,742)          (862,700)
            Goodwill                                                        (135,000)          (144,699)
            Other                                                             73,578           (159,390)
            Accounts payable and accrued expenses                          1,527,518             95,046
            Income taxes payable                                              (6,475)           (84,795)
            Deferred transaction and financing costs                        (130,374)           142,726
                                                                            ---------           -------
                  Net cash provided by operating activities                1,231,147          1,807,259
                                                                           ---------          ---------

Cash Flows from Investing Activities:
      Loan receivable                                                         50,411            (99,589)
      Purchases of property, plant and equipment                             (30,988)          (356,694)
                                                                             --------          ---------
                  Net cash provided (used in) by investing activities         19,423           (456,283)
                                                                              ------           ---------

Cash Flows from Financing Activities:
      Borrowings (payments) against the revolving line of credit             174,469             (5,920)
      Distributions to limited partners of joint ventures                   (267,076)          (187,552)
      Payments on capital lease obligations                                 (434,662)          (835,889)
      Payments on bridge financing                                        (1,118,960)          (528,438)
      Payments on reserve for subleased equipment                                  -           (254,181)
                                                                          ----------           ---------
                  Net cash used in financing activities                   (1,646,229)        (1,811,980)
                                                                          -----------        -----------

  Decrease in cash and cash equivalents                                     (395,659)          (461,004)
  Cash and cash equivalents at beginning of period                           645,389          1,506,123
                                                                             -------          ---------
  Cash and cash equivalents at end of period                                $249,730         $1,045,119
                                                                            ========         ==========

Supplemental Cash Flow Information:
  Interest paid during the period                                         $1,217,157         $1,259,179
                                                                          ==========         ==========

  Income taxes paid during the period                                        $29,795           $180,325
                                                                             =======           ========

Supplemental Schedule of Non-Cash Investing and Financing
Activities:
  Capital leases principally for medical equipment                        $1,594,211    $       -
                                                                          ==========    ===============

</TABLE>


       See  accompanying  notes  to  consolidated  financial statements.

                                                         6

<PAGE>



              HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements
                          Six Months Ended June 30, 2000

Note 1. - Basis of Presentation

         The accompanying  unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Rule 10-01 of Regulation  S-X.  Accordingly,  certain  information  and footnote
disclosures  normally included in annual consolidated  financial statements have
been omitted from the accompanying interim consolidated financial statements. In
the opinion of management,  the accompanying  unaudited  consolidated  financial
statements  contain all  adjustments  necessary to present  fairly the Company's
financial  position as of June 30, 2000 and the related statements of operations
and cash flows for the  periods  ended June 30,  2000 and 1999.  The Company has
recorded a net deferred tax asset of  $2,543,926,  an increase of $49,742 during
the six months  ended June 30,  2000,  reflecting  the benefit of  approximately
$3,720,000 in federal loss  carryforwards that expire in varying amounts between
December 31, 2006 and December  31, 2014.  Realization  of this net deferred tax
asset is dependent upon generating sufficient taxable income prior to expiration
of the loss carryforwards.  Although  realization of this net deferred tax asset
is not assured,  management  believes it is more likely than not that all of the
net deferred tax asset will be realized through future profitable operations.

         The Company has an accumulated  deficit of $4,686,535 and $4,015,105 at
June 30, 2000 and December 31, 1999, respectively.  The increase is attributable
primarily to the net loss incurred by the Company during the first six months of
2000. Cash flows provided by operating activities were $1,231,147 and $1,807,259
for the six months  ended June 30,  2000 and June 30,  1999,  respectively.  The
Company is actively engaged in discussions  with two financial  institutions for
interim and long-term financing to help facilitate the Company's continuing cash
requirements.  The Company  anticipates a  significant  increase in its revenues
from the acquisition of Jersey  Integrated  HealthPractice,  Inc.  ("JIHP") (See
Note 8 - Newly Formed Ventures), as well as from Clinical Research trials it has
recently arranged.

         The results of  operations  for the six months  ended June 30, 2000 are
not  necessarily  indicative of the results of operations  expected for the year
ending  December  31,  2000 or any  other  period.  The  consolidated  financial
statements  included herein should be read in conjunction  with the consolidated
financial  statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year  ended  December  31,  1999  which is on file with the
Securities and Exchange Commission.

Note 2. - Earnings Per Share

         Basic  (loss)  earnings  per common  share are computed by dividing net
(loss) income available to common shareholders by the weighted average number of
common shares outstanding for the six month period ended June 30, 2000 and 1999,
as applicable. Diluted (loss) earnings per common share are computed by dividing
net (loss)  income  available to common  shareholders  by the  weighted  average
number of common shares outstanding for the six month period ended June 30, 2000
and 1999,  as  applicable,  plus the  incremental  shares  that  would have been
outstanding  upon the  assumed  exercise  of dilutive  stock  option  awards and
conversion of the preferred shares.

                                                         7

<PAGE>



         The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share computations:

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



                                                              For the Three Months Ended June 30,
                                                    2000                                                1999
                               ----------------------------------------------      ----------------------------------------------
                                                (Unaudited)                                         (Unaudited)
                               ----------------------------------------------      ----------------------------------------------
                                Income(Loss)       Shares         Per-Share            Income          Shares        Per-Share
                                (Numerator)     (Denominator)      Amount           (Numerator)    (Denominator)       Amount
Basic EPS
Net (Loss)Income Available to
Common Shareholders                $(150,080)      1,135,699        $(.13)           $ 516,403        1,135,699           $.45
Add:
Preferred Dividends                                        -                           272,216                -

Effect of Dilutive Securities
Stock Options                               -                                                 -          44,216
Series D Stock                              -                                                 -         872,393
                               -------------- -----------------                    --------------     ----------
                                   $(150,080)       1,135,699       $(.13)            $ 788,619       2,052,308           $.38
Diluted EPS
Net (Loss)/Income
                               ============== ================= =============      ============== ================ ==============


                                                               For the Six Months Ended June 30,
                                                   2000                                                 1999
                              -----------------------------------------------      ----------------------------------------------
                                                (Unaudited)                                         (Unaudited)
                              -----------------------------------------------      ----------------------------------------------
                               Income(Loss)        Shares         Per-Share            Income          Shares        Per-Share
                                (Numerator)     (Denominator)      Amount           (Numerator)    (Denominator)       Amount
Basic EPS
Net (Loss)Income Available
to Common Shareholders             $(713,423)         1,135,699     $(.63)           $ 962,158        1,135,699           $.85
Add:
Preferred Dividends                                           -                        501,049                -

Effect of Dilutive Securities
Stock Options                               -                                                -           50,625
Series D Stock                              -                                                -          872,393
                              --------------- -----------------                    -------------- ----------------
                                   $(713,423)         1,135,699     $(.63)          $1,463,207        2,058,717           $.71
Diluted EPS
Net (Loss)/Income
                              =============== ================= =============      ============== ================ ==============

</TABLE>

Note 3. - Relocation of Corporate Offices and Company Name Change

                  Effective  August 1, 1999,  the Company's  corporate  name was
changed to HealthCare  Integrated Services,  Inc. and its corporate offices were
relocated to Shrewsbury Executive Center II, 1040 Broad Street,  Shrewsbury, New
Jersey 07702.  In  conjunction  with the  relocation of the Company's  corporate
offices,  the Company  entered into a five year lease for  approximately  10,300
square feet of space.  The lease provides for fixed annual rent in each of years
one and two of $196,308, and $206,640 in each of years three through five. Since
January  20,  2000,  the  Common  Stock has been  listed on the  American  Stock
Exchange ("AMEX") under the symbol "HII". Prior thereto, it had been included in
The Nasdaq Stock Market under the symbol "HISS".


                                                         8

<PAGE>



Note 4. - Beran Acquisition

                  On October 2, 1998  (effective  October 1, 1998),  HIS Imaging
LLC.,  a   wholly-owned   subsidiary  of  the  Company,   acquired  (the  "Beran
Acquisition") all of the assets and business of, and assumed certain liabilities
relating to (i) a  fixed-site  MRI  facility  in  Voorhees,  New Jersey,  (ii) a
multi-modality  diagnostic  imaging  facility  in  Northfield,  New Jersey and a
radiology facility in Ocean City, New Jersey, (iii) a multi-modality  diagnostic
imaging facility in Bloomfield,  New Jersey and (iv) a multi-modality diagnostic
imaging  facility  in  Voorhees  and  Williamstown,  New Jersey and a  radiology
facility  in  Atco  and  Williamstown,  New  Jersey  (collectively,  the  "Beran
Entities").  The consideration given by the Company in the Beran Acquisition was
(x) the assumption of certain obligations and liabilities of the Beran Entities,
(y) cash in the amount of $11.5  million and (z) the issuance of 887.385  shares
of Series D Cumulative  Accelerating  Redeemable  Preferred Stock of the Company
(the  "Series  D  Stock")   having  an  aggregate   liquidation   preference  of
$9,317,542.50  (i.e.,  $10,500 per share liquidation  preference).  The purchase
price was  subject to an  adjustment  based on the value of the Beran  Entities'
accounts receivable as of the closing date and, in accordance therewith,  15.642
shares of Series D Stock having an aggregate liquidation  preference of $164,241
were  transferred  back to the Company and  canceled.  The Company  also assumed
certain  contractual  obligations of the Beran Entities on a going-forward basis
under the contracts assigned to the Company in the Beran Acquisition  (including
operating leases and equipment maintenance agreements).  The Company also loaned
the Beran  Entities (the "Beran Loan") an aggregate of $2.5 million,  which loan
bore  interest at 8% per annum and was to mature  upon the terms and  conditions
contained in the related  promissory  notes, but in no event later then December
31, 1999. As of December 31, 1999, the Beran  Entities  repaid the Beran Loan in
shares  of  Series  D Stock  (i.e.,  238.096  shares  of  Series  D  Stock  were
transferred  back to the Company and  cancelled in repayment of this loan).  The
Company  used the  proceeds of a $14.0  million  bridge loan from DVI  Financial
Services Inc.  ("DFS") to pay the cash portion of the purchase price and to fund
the loan to the Beran Entities (the "DFS Loan").

                  The DFS Loan  bears  interest  at 12% per annum.  The  initial
repayment  schedule of the DFS Loan was as follows:  no payment due in month one
(i.e.,  November 1998), interest only payments of $140,000 in each of months two
through four (i.e.,  December 1998,  January 1999 and February 1999),  principal
and interest  payments of approximately  $308,000 in each of months five and six
(i.e.,  March 1999 and April 1999) with a balloon  payment of $13,951,804 due in
month seven (i.e.,  May 1999),  which balloon  payment date had been extended to
August 1, 1999. In September 1999, the Company  renegotiated the DFS Loan into a
long-term  liability.  As a result, the repayment date of the debt is now May 1,
2004, with principal and interest payments of approximately  $308,000 payable by
the Company in each of the 56 months commencing October 1, 1999. The outstanding
balance  of the  DFS  Loan at the  time of  renegotiation  was  $13,166,217.  In
addition, options to purchase 400,000 shares of common stock, par value $.01 per
share,  of the Company at an exercise price of $1.03125 per share were issued to
DFS for providing  the DFS Loan.  The Beran  Acquisition  was accounted for as a
purchase.

                  In July 1999,  the  Company  ceased  operations  at its Monroe
Diagnostic Imaging Center (the "Williamstown Facility") located in Williamstown,
New Jersey.  The facility,  historically  and since its  acquisition  in October
1998,  had operated  unprofitably.  Following its  acquisition,  the Company was
unsuccessful in its attempts to profitably operate the facility.  It was decided
that the Company had to either invest in certain equipment upgrades to modernize
the facility or cease its operations.  After analysis of the pertinent  factors,
the Company determined to close the facility. The closure of the

                                                         9

<PAGE>



Williamstown  Facility  resulted in a one-time  charge to operations  during the
quarter ended September 30, 1999 of  approximately  $33,000,  which is primarily
comprised of a reserve for estimated future cash outflows relating to the leased
premises.

Note 5. - Deferred Transaction and Financing Costs

                  Deferred  transaction  and financing costs relate to legal and
accounting fees incurred in connection with the Company's  proposed  acquisition
of a management services  organization ("MSO") and other pending acquisitions or
management services contracts. Deferred financing costs relate to costs incurred
in  connection  with the  Company's  proposed  new  financing  of the  Company's
expansion plans. In the event any of such proposed  acquisitions or financing is
not consummated or any such management  services  contract is not executed,  the
related deferred costs will be expensed.

Note 6. - Segment Information

                  The Company currently operates in two industry  segments:  (i)
diagnostic  imaging  and  (ii)  physician   management/consulting  and  clinical
research operations. The diagnostic imaging segment primarily involves operating
fixed-site  diagnostic imaging facilities.  The physician  management/consulting
and clinical  research  segment,  which commenced  operations  during the second
quarter of fiscal 1998, consists of providing management and consulting services
to independent physician practices and providing clinical research opportunities
to such practices and others.

                  The following table shows net revenues and operating income by
industry segment for the three and six month periods ended June 30, 2000. Assets
are not identified by industry  segment.  Operating  income consists of revenues
less direct  operating  expenses.  All  corporate  operating  expenses have been
allocated to the diagnostic imaging segment:

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


                                                                    Three Months       Six Months
                                                                        Ended             Ended
                                                                    June 30, 2000     June 30, 2000
                                                                      (Unaudited)      (Unaudited)
                Net revenues:
                      Diagnostic imaging                              $4,520,812       $9,183,545
                      Physician management/consulting
                        and clinical research                            320,300          648,935
                                                                      ----------      -----------
                      Total                                           $4,841,112       $9,832,480
                                                                      ==========       ==========

                Operating (loss)/income:
                      Diagnostic imaging                               $(120,334)       $(668,513)
                      Physician management/consulting
                        and clinical research                            170,873          356,410
                                                                         -------          -------
                      Total                                              $50,549        $(312,103)
                                                                         =======        ==========

</TABLE>


Note 7. - Acquisition of Limited Partners' Interest

                Prior to May 1, 1999,  the  Company's  MRI  facility  located in
Philadelphia,  Pennsylvania was operated as a joint venture among a wholly-owned
subsidiary of the Company (as the general partner

                                                        10

<PAGE>



holding a 60% partnership interest) and certain individual medical professionals
and others (as limited  partners  holding in the  aggregate  the  remaining  40%
partnership  interests).   Effective  May  1,  1999,  the  Company's  subsidiary
consummated the purchase of the limited partners' 40% partnership  interests for
$100,000 in cash. At April 30, 1999, the net book value of this 40%  partnership
interest was $0. The $100,000  purchase price will be recorded by the Company as
goodwill and amortized over a period of ten years.

Note 8. - Newly Formed Ventures

                Effective April 1999, the Company, in a 50/50 joint venture with
HealthMark Alliance, Inc. ("HAI"), formed Atlantic Imaging Group, LLC ("Atlantic
Imaging") to develop, market and manage statewide networks of diagnostic imaging
facilities. The initial scope of the network is New Jersey. The Company provides
day-to-day  administrative and management services to Atlantic Imaging, and both
the Company and HAI provide  marketing  services.  Atlantic  Imaging has entered
into a five-year arrangement with National Healthcare  Resources,  Inc. ("NHR"),
which provides medical case management  services to several insurance  carriers,
whereby,  among  other  things,  NHR has  agreed to  utilize  the  network on an
exclusive  basis for any MRI  services it refers  claimants  to on behalf of its
clients  (unless  otherwise  instructed  by such  client)  and will  utilize the
network for other radiology services to the extent practicable. Atlantic Imaging
is being  accounted  for by the  Company  using the equity  method.  The network
presently  consists  of 85  diagnostic  imaging  facilities  in New  Jersey  and
currently  provides services to 18 automobile  insurance  carriers in New Jersey
including:   Allstate   Insurance   Company,   Palisades  Safety  and  Insurance
Associates,   National  General  Insurance   Company,   Metropolitan,   National
Continental Progressive Insurance Company and Highlands Insurance Group.

                In addition,  in September 1999 the Company established clinical
research operations through a wholly-owned subsidiary, HIS Clinical Research Co.
LLC  ("HISCR").   HISCR  focuses  on  arranging  clinical  research  trials  for
pharmaceutical companies. To date, HISCR has arranged 18 clinical studies in the
areas  of  rheumatology   pain  management   medication,   chronic   prostatitis
medication,    diabetes   drug   therapies,    chronic   bronchitis,    diabetic
polyneuropathy,  respiratory track  infections,  sinusitis,  smoking  reduction,
hypertension   and   pneumonia   medication   on  behalf  of   various   leading
pharmaceutical companies including ASTA Medica, Inc.; Abbott Laboratories; Merck
& Co., Inc.; Ortho-McNeil Pharmaceutical,  Inc.; SmithKline Beecham Corporation;
Takeda  America  Research &  Development  Center,  Inc.;  Bristol  Meyers Squibb
Company; and Glaxo Wellcome,  Inc. HISCR has exclusive five-year agreements with
two  New  Jersey-based   multi-specialty  physician  practices  to  arrange  and
coordinate  clinical  research trials on behalf of their over 100 physicians and
160,000  patients.  Amounts  attributable to the operations of HISCR for the six
months ended June 30, 2000 are not significant.

                In  January  2000,  the  Company  formed  CliniCure.com,  LLC, a
wholly-owned  subsidiary,  to provide  web-based  outreach for clinical research
trials by  physicians,  universities,  hospitals and  pharmaceutical  companies.
CliniCure.com's  Web site is intended to be an easy to navigate medical web site
which will  facilitate  access to medical  clinical trials for both patients and
physicians alike. It is expected that patient users will be able to research new
clinical trials beginning in a variety of areas and, if interested, will be able
to  apply  for  participation  in these  trials.  Additionally,  physicians  and
researchers  will be able to  utilize  the  site  as a  referral  source  in the
recruitment of candidates for clinical trials.


                                                        11

<PAGE>



Physician Management and Consulting Operations

                Since February  1999, the Company has been providing  management
and  consulting  services  to  a  New  Jersey-based   multi-specialty  physician
practices,  North Jersey  Health,  P.A. ("NJ  Health").  NJ Health is one of the
largest   independent   multi-specialty   physician  practices  in  New  Jersey,
consisting of 32 physicians,  16 offices and 80,000 active patients. In December
1999,  the Company  entered into a letter of intent with NJ Health setting forth
the terms of an agreement which provides for, among other things, management and
consulting  services  pursuant to an administrative  services  agreement with an
initial  term of five years,  during  which  period the Company  will provide NJ
Health  with  certain  non-medical,   management  and  consulting  services.  In
accordance  with  the  agreement,  NJ  Health  will pay to the  Company  a fixed
management fee of $500,000 per annum.  In addition to the fixed  management fee,
additional  management  fees will be paid to the Company  from NJ  Health's  net
income related to ancillary services.  The agreement also enables the Company to
acquire the assets of NJ Health,  subject to certain financial  milestones being
achieved, as well as the satisfaction of certain additional  conditions,  during
the first three years of the agreement.

                The Company  decided to expand its strategic focus into the area
of physician  management and consulting  and, in connection  therewith,  in July
2000,  the  Company  announced  that  it had  entered  into  several  agreements
including  (1) a merger  agreement  relating  to the  acquisition  of JIHP,  the
management services organization which manages Pavonia Medical Associates,  P.A.
("PMA"), and (2) a multi-year  administrative  services agreement with PMA which
includes a minimum management fee of $1.0 million per year.

                The merger  agreement  with PMA provides for the  acquisition by
the Company of PMA's  approximately  72% equity interest in JIHP in exchange for
the issuance to PMA of preferred  stock of the Company which will  automatically
convert into 1.0 million shares of common stock of the Company upon the approval
of such  issuance  by the  Company's  stockholders.  In  consideration  for such
payment, PMA has entered into a 26-year  administrative  services agreement with
the Company (subject to earlier termination under certain specified conditions),
pursuant to which PMA will pay the Company a management  fee of $1.0 million per
annum payable in equal monthly installments plus an additional management fee of
10% of PMA's  annual  revenues  over $20.0  million.  Among  other  things,  the
consummation of the acquisition of Jersey  Integrated is subject to execution of
definitive acquisition documents with Liberty HealthCare System, Inc., the owner
of  the  remaining  equity  interest  in  Jersey  Integrated.  The  Company  had
previously  entered into an  exclusive  five year  agreement  with PMA to manage
clinical research trials on its behalf.

                PMA is one of the largest  multi-specialty  medical practices in
the state of New Jersey comprised of 72 physicians serving over 80,000 patients.
Its  principal  office is  located  in Jersey  City,  New Jersey and it also has
offices in two other  locations  in northern  New  Jersey.  The Company has been
providing management services to PMA for over two years.

                                                        12

<PAGE>



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

         CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995.  Statements  in this  Quarterly  Report that are not  historical  facts
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of  1934,  as  amended.  Any  statements  contained  herein  which  are  not
historical facts or which contain the words "anticipate," "believe," "continue,"
"estimate,"  "expect,"  "intend," "may,"  "should," and similar  expressions are
intended to identify  forward-looking  statements.  Such statements  reflect the
current  view of the Company  with  respect to future  events and are subject to
certain risks, uncertainties and assumptions, including, but not limited to, the
risk that the Company may not be able to  implement  its growth  strategy in the
intended manner including the integration of acquisitions, risks associated with
the  Company's  need to  refinance  certain  near-term  debt  maturities,  risks
regarding currently unforeseen  competitive pressures affecting  participants in
the health care  market and risks  affecting  the  Company's  industry,  such as
increased regulatory compliance and changes in regulatory requirements,  changes
in payor  reimbursement  levels and  technological  changes.  In  addition,  the
Company's  business,  operations  and  financial  conditions  are subject to the
risks,  uncertainties  and  assumptions  which are  described  in the  Company's
reports and statements  filed from time to time with the Securities and Exchange
Commission.

For the Six Months Ended June 30, 2000 vs. June 30, 1999

                For the six months ended June 30, 2000, revenues were $9,832,480
as compared to $11,773,301 for the six months ended June 30, 1999, a decrease of
approximately  $1,941,000  or 16%.  For the six  months  ended  June  30,  2000,
revenues  from the four New  Jersey-based  diagnostic  imaging  facilities  (the
"Beran  Facilities")  acquired  effective  as of  October  1, 1998  (the  "Beran
Acquisition")  had decreased by  approximately  $976,000,  and revenues from the
Company's  Monmouth,  Edgewater  and  Wayne  MRI  facilities  had  decreased  by
approximately $1,054,000. Interest income decreased by $229,000. These decreases
were partially offset by increases at the Company's Brooklyn and Lower Manhattan
facilities  of  approximately   $318,000.  The  Company's  working  capital  was
adversely  affected  by the  marked  decline  in the  number  of MRI  and  other
diagnostic  imaging  referrals to the  Company's  New Jersey  facilities,  which
decline  resulted  from certain  changes  enacted and penalties  implemented  by
automobile  insurance  carriers  in  late  December  1999  to  pre-certification
requirements of diagnostic imaging  procedures and the uncertainties  associated
with these changes.

                For the six months ended June 30, 2000,  operating expenses were
$10,144,583 as compared to $10,916,254 for the six months ended June 30, 1999, a
decrease of approximately $772,000 or 7%. This decrease was primarily due to (i)
decreased interest expense (approximately $304,000) as a result of a decrease in
interest payments to DVI Financial Services Inc. ("DVI") under the $14.0 million
bridge  loan (the  "DFS  Loan")  provided  to the  Company  in  October  1998 in
connection with the Beran Acquisition  (which loan was renegotiated in September
1999 from a short-term bridge loan into a long-term  liability),  (ii) decreased
overall salary  expense  relating to the  elimination of several  management and
administrative   positions  in  connection   with,   among  other  things,   the
consolidation of billing  functions  (approximately  $488,000),  (iii) decreased
consulting,  marketing and professional fees  (approximately  $225,000) and (iv)
decreased overall general and administrative expenses

                                                        13

<PAGE>



(approximately $378,000).  These decreases are a result of the Company's overall
expense reduction  efforts that have recently been instituted.  The decreases in
operating  expenses were partially offset by (A) an increase in depreciation and
amortization  expenses relating to additional  medical equipment acquired during
the first six months of 2000 (approximately  $58,000) and (B) an increase in bad
debt expense relating to the Beran receivables (approximately $565,000).

                Earnings for the six months ended June 30, 2000,  as a result of
the Company's 50% ownership  interest in Atlantic Imaging, a 50/50 joint venture
formed in April 1999 with HAI to develop,  market and manage statewide  networks
of  diagnostic  imaging  facilities  (See  Note  8  to  accompanying   financial
statement) increased by approximately $305,000. This increase is a result of the
joint venture  being in operation for the entire period and increased  volume at
the network's facilities.

For the Three Months Ended June 30, 2000 vs. June 30, 1999

                For  the  three  months  ended  June  30,  2000,  revenues  were
$4,841,112 as compared to $5,750,799 for the three months ended June 30, 1999, a
decrease of approximately $909,000 or 16%.
 For the  three  months  ended  June  30,  2000,  revenues  from  the  four  New
Jersey-based  diagnostic  imaging facilities (the "Beran  Facilities")  acquired
effective  as of October 1, 1998 (the  "Beran  Acquisition")  had  decreased  by
approximately $374,000, and revenues from the Company's Monmouth,  Edgewater and
Rittenhouse  MRI  facilities  had  decreased by  approximately  $690,000.  These
decreases were partially offset by increases at the Company's Brooklyn and Lower
Manhattan  facilities of approximately  $155,000.  The Company's working capital
was  adversely  affected  by the  marked  decline in the number of MRI and other
diagnostic  imaging  referrals to the  Company's  New Jersey  facilities,  which
decline  resulted  from certain  changes  enacted and penalties  implemented  by
automobile  insurance  carriers  in  late  December  1999  to  pre-certification
requirements of diagnostic imaging  procedures and the uncertainties  associated
with these changes.

                For the three  months ended June 30,  2000,  operating  expenses
were  $4,790,573 as compared to  $5,350,442  for the three months ended June 30,
1999, a decrease of  approximately  $560,000 or 10%. This decrease was primarily
due to (i) decreased interest expense  (approximately  $78,000) as a result of a
decrease in interest  payments to DVI Financial  Services Inc. ("DVI") under the
$14.0  million  bridge loan (the "DFS Loan")  provided to the Company in October
1998 in connection with the Beran  Acquisition  (which loan was  renegotiated in
September 1999 from a short-term bridge loan into a long-term  liability),  (ii)
decreased  overall  salary  expense  relating  to  the  elimination  of  several
management and administrative  positions in connection with, among other things,
the consolidation of billing functions (approximately $348,000), (iii) decreased
consulting,  marketing and  professional  fees  (approximately  $170,000),  (iv)
decreased overall general and administrative expenses  (approximately  $193,000)
and (v)  decreased  depreciation  and  amortization  expense  relating  to fully
depreciated assets (approximately  $59,000). These decreases are a result of the
Company's  overall expense reduction efforts that have recently been instituted.
The decreases in operating  expenses were partially offset by an increase in bad
debt expense relating to the Beran receivables (approximately $288,000).

                Earnings for the three  months ended June 30, 2000,  as a result
of the  Company's  50%  ownership  interest in Atlantic  Imaging,  a 50/50 joint
venture  formed in April 1999 with HAI to develop,  market and manage  statewide
networks of diagnostic imaging facilities (See Note 8 to accompanying  financial
statement) increased by approximately $314,000. This increase is a result of

                                                        14

<PAGE>



the joint venture being in operation for the entire period and increased  volume
at the network's facilities.

Liquidity and Capital Resources of the Company

                As of June 30, 2000, the Company had a cash balance of $249,730,
current assets of $15,371,055,  current  liabilities of $7,581,052 and a working
capital of $7,790,003.

                While the Company's working capital benefited from the Company's
renegotiation  in  September  1999 of the DFS Loan  into a  long-term  liability
(which renegotiation resulted in an extended repayment date of May 1, 2004, with
monthly principal and interest payment of approximately $308,000), the Company's
working  capital was adversely  affected by the marked  decline in the number of
MRI  and  other  diagnostic  imaging  referrals  to  the  Company's  New  Jersey
facilities,  which decline  resulted from certain  changes enacted and penalties
implemented  by  automobile   insurance   carriers  in  late  December  1999  to
pre-certification   requirements  of  diagnostic   imaging  procedures  and  the
uncertainties associated with these changes.

                The  Company  is  actively   engaged  in  discussions  with  two
financial  institutions  for interim and long-term  financing to help facilitate
the Company's  continuing cash  requirements.  Furthermore,  the Company is also
prepared to adopt additional  expense reduction  measures if its estimates as to
its  cash  requirements  and  satisfaction   thereof  prove  to  be  inaccurate.
Additionally,  the Company  anticipates a  significant  increase in its revenues
from the  acquisition of JIHP, as well as, from clinical  research trials it has
recently arranged.

                Cash flows provided by operating  activities were $1,231,147 for
the six months ended June 30, 2000, which consisted primarily of (i) net loss of
$713,423, (ii) depreciation and amortization of $1,630,561, (iii) an increase in
the allowance for doubtful  accounts  receivable of $1,118,000 and (iv) minority
interests in joint  ventures of $80,324.  Other  significant  components of cash
flows  provided  by  operating  activities  include  (A) an increase in accounts
receivable,  net of $947,113,  (B) an increase in deferred tax asset of $49,742,
(C) an increase in prepaid  expenses and other of $140,700,  and (D) an increase
in accounts payable and accrued expenses of $1,527,518.

                Cash flows provided by investing activities were $19,423,  which
related to interest income of $50,411 associated with a $2.5 million loan to the
Beran  Entities and purchases of property,  plant and equipment of $30,988.  The
loan to the Beran  Entities  bears interest at 8% per annum and matures upon the
terms and conditions  contained in the related promissory notes, but in no event
later then December 31, 1999. As of December 31, 1999, the Beran entities repaid
this loan in shares of Series D  Cumulative  Accelerating  Redeemable  Preferred
Stock  (i.e.,  238.096  shares of Series D Stock  were  transferred  back to the
Company and cancelled in repayment of this loan).

                Cash flows used in financing  activities were $1,646,229,  which
consisted  primarily  of  payments on capital  lease  obligations  of  $434,662,
payments  on the DFS Bridge  Loan of  $1,118,960  and  distributions  to limited
partners of joint  venture of $267,076,  all of which were  partially  offset by
borrowing  under the Company's  revolving line of credit,  as discussed below of
$174,469.

                In July 2000,  the Company  announced  that it had entered  into
several agreements  including (1) a merger agreement relating to the acquisition
of JIHP, the management services organization

                                                        15

<PAGE>



which manages Pavonia Medical  Associates,  P.A.  ("PMA"),  and (2) a multi-year
administrative  services  agreement with PMA which includes a minimum management
fee of $1.0 million per year.

                The merger  agreement  with PMA provides for the  acquisition by
the Company of PMA's  approximately  72% equity interest in JIHP in exchange for
the issuance to PMA of preferred  stock of the Company which will  automatically
convert into 1.0 million shares of common stock of the Company upon the approval
of such  issuance  by the  Company's  stockholders.  In  consideration  for such
payment, PMA has entered into a 26-year  administrative  services agreement with
the Company (subject to earlier termination under certain specified conditions),
pursuant to which PMA will pay the Company a management  fee of $1.0 million per
annum payable in equal monthly installments plus an additional management fee of
10% of PMA's  annual  revenues  over $20.0  million.  Among  other  things,  the
consummation of the acquisition of Jersey  Integrated is subject to execution of
definitive acquisition documents with Liberty HealthCare System, Inc., the owner
of  the  remaining  equity  interest  in  Jersey  Integrated.  The  Company  had
previously  entered into an  exclusive  five year  agreement  with PMA to manage
clinical research trials on its behalf.

                PMA is one of the largest  multi-specialty  medical practices in
the state of New Jersey comprised of 72 physicians serving over 80,000 patients.
Its  principal  office is  located  in Jersey  City,  New Jersey and it also has
offices in two other  locations  in northern  New  Jersey.  The Company has been
providing management services to PMA for over two years.

                When completed, the Company expects the acquisition of JIHP will
act as a  platform  from  which  the  Company  hopes to  continue  to build  its
physician  practice  management and consulting  division,  its clinical research
trials division and its clinical trials website, CliniCure.com,  and is intended
to be a launching  pad for the  e-commerce  expansion of its  business,  selling
products and services to physicians and patients alike.  Continued  expansion of
these businesses may require additional sources of financing in the future.

                In December 1997, the Company agreed to guarantee a $1.0 million
loan from DFS to JIHP.  This loan was  funded by DFS to JIHP on  January 8, 1998
and bears interest at 12% per annum and is repayable  over 48 months  commencing
in February 1998 at $26,330 per month. At June 30, 2000,  approximately $453,179
of the loan was  outstanding.  PMA and each  physician  stockholder  of PMA have
acknowledged  that such extension of credit is for their benefit and have agreed
that to the  extent  that the  Company  is or  becomes  liable in respect of any
indebtedness  or other  liability or obligation  of either PMA or JIHP,  and the
acquisition by the Company of 100% of the  outstanding  capital stock of JIHP is
not  consummated,  then  PMA and  each  physician  stockholder  of PMA  agree to
indemnify  and hold the  Company  harmless  from  and  against  any and all such
liabilities and obligations.

                Effective December 26, 1996, the Company entered into a Loan and
Security Agreement with DVI Business Credit Corporation ("DVIBC"),  an affiliate
of DFS, to provide a revolving line of credit to the Company. The maximum amount
available  under such credit  facility  initially was  $2,000,000,  which amount
increased to $3,000,000 in October 1998 in connection with the Beran Acquisition
and further  increased to $4,000,000 in December 1999, with advances  limited to
75% of eligible accounts  receivable,  as determined by DVIBC.  Borrowings under
the line of credit bear  interest at the rate of 3% over the prime  lending rate
and are repayable on May 26, 2001.  The Company's  obligations  under the credit
facility are collateralized  through a grant of a first security interest in all
eligible accounts receivable.  The agreement contains customary  affirmative and
negative covenants including covenants requiring the Company to maintain certain
financial ratios and

                                                        16

<PAGE>



minimum levels of working  capital.  Borrowings  under this credit  facility are
used to fund working  capital  needs as well as acquiring  businesses  which are
complementary  to the Company.  At June 30, 2000,  the Company had $3,425,829 of
borrowings under this credit facility.

                Prior to May 1, 1999,  the  Company's  MRI  facility  located in
Philadelphia,  Pennsylvania was operated as a joint venture among a wholly-owned
subsidiary  of the  Company (as the general  partner  holding a 60%  partnership
interest) and certain  individual  medical  professionals and others (as limited
partners  holding in the aggregate the  remaining  40%  partnership  interests).
Effective May 1, 1999, the Company's subsidiary  consummated the purchase of the
limited  partners' 40% partnership  interests for $100,000 in cash. At April 30,
1999, the net book value of this 40%  partnership  interest was $0. The $100,000
purchase  price  has been  recorded  by the  Company  as  goodwill  and is being
amortized over a period of ten years.

                The Company is currently negotiating the purchase of the limited
partners'  ownership  interests in its MRI facility located in Wayne, New Jersey
or, in the alternative,  the sale of the Company's  interest in such facility to
the limited  partners.  This  facility is  operated as a joint  venture  among a
wholly-owned  subsidiary  of the Company (as the general  partner  holding a 51%
partnership interest) and two individual medical professionals, who also provide
consulting  services  to this  facility  (as  limited  partners  holding  in the
aggregate the  remaining 49%  partnership  interest).  However,  there can be no
assurance that the Company will be successful in its negotiations to acquire the
limited partners' ownership interest or in an alternative,  to sell its interest
in this facility to the limited partners.

                In  July  1999,   the  Company   closed  its  MRI   facility  in
Williamstown,  New Jersey. The facility,  historically and since its acquisition
in October 1998 as part of the Beran  Acquisition,  had  operated  unprofitably.
Following  its  acquisition,  the Company was  unsuccessful  in its  attempts to
profitably  operate the facility.  It was decided that the Company had to either
invest in certain  equipment  upgrades to  modernize  the  facility or cease its
operations.  After analysis of the pertinent factors,  the Company determined to
close the facility.  The closure of this facility  resulted in a one-time charge
to  operations  during the quarter  ended  September  30, 1999 of  approximately
$33,000,  which is primarily  comprised of a reserve for  estimated  future cash
outflows relating to the leased premises.

                The  nature  of the  Company's  operations  require  significant
capital  expenditures which generally have been financed through the issuance of
debt  and  capital  leases  and  proceeds  received  from  the  sale  of  equity
securities,  including the Company's initial public offering of Common Stock and
redeemable warrants in November 1991, the subsequent exercise of such redeemable
warrants and the sale of Series C Convertible  Preferred Stock in February 1996.
Continued  expansion of the Company's  business,  including the expansion of the
Company's physician management/consulting and clinical research operations, will
require  substantial  cash  resources  and will have an impact on the  Company's
liquidity.  The  Company  believes  that cash to be  provided  by the  Company's
operating  activities  together  with  borrowings  available  from the Company's
revolving  line of credit will enable the Company to meet its  anticipated  cash
requirements for its present  operations for the next twelve months. The Company
has  instituted  measures to improve its  revenues,  including  the formation of
Atlantic Imaging in April 1999 with HealthMark Alliance, Inc. to develop, market
and  manage   statewide   networks  of  diagnostic   imaging   facilities,   the
establishment of clinical research operations and the launching of CliniCure.com
to provide  web-based  outreach  for  clinical  research  trials by  physicians,
universities,  hospitals and pharmaceutical  companies,  and is also considering
various other

                                                        17

<PAGE>



strategic  alternatives,  including  additional joint ventures,  the sale and/or
other disposition of all or a portion of its diagnostic  imaging  operations and
expansion of its e-commerce operations.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Not Applicable.

                                                        18

<PAGE>



                                            PART II - OTHER INFORMATION

         Items 1 through 5 have been omitted because the related  information is
either inapplicable or has been previously reported.

Item 6.  Exhibits and Reports on Form  8-K

         (a)    Exhibit 27          -       Financial Data Schedule

         (b) The Company did not file any reports on Form 8-K during the quarter
ended June 30, 2000.


                                                        19

<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.

HEALTHCARE INTEGRATED SERVICES, INC.
                  (Registrant)



Date: August 21, 2000                       /s/ Elliott H. Vernon
                                           ----------------------
                                           Elliott H. Vernon
                                           Chairman of the Board and
                                           Chief Executive Officer
                                          (Principal Executive Officer)


Date: August 21, 2000                       /s/ Alfred Beltrani
                                            --------------------
                                            Alfred Beltrani
                                            Vice President - Controller
                                           (Principal Financial and
                                            Accounting Officer)


                                                        20