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 March 31, 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 May 22, 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.        Unaudited Consolidated Financial Statements:

               Consolidated Balance Sheets -
               March 31, 2000 and December 31, 1999                          3

               Consolidated Statements of Operations -
               Three months ended March 31, 2000 and 1999                    4

               Consolidated Statement of Changes in Stockholders Equity -
               For the three months ended March 31, 2000                     5

               Consolidated Statements of Cash Flows -
               Three months ended March 31, 2000 and 1999                    6

               Notes to Unaudited Consolidated Financial Statements          7

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

Item 3.        Quantitative and Qualitative Disclosure About                16
               Market Risk

PART II.       OTHER INFORMATION

Item 5.        Other Information                                            17

Item 6.        Exhibits and Reports on Form 8-K                             17

SIGNATURES                                                                  18


                                              2

<PAGE>




                     HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                                  CONSOLIDATED BALANCE SHEETS

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

                                                                March 31,           December 31,
Assets                                                             2000                 1999
------                                                            ------                -----
                                                               (Unaudited)
Current Assets:
   Cash and cash equivalents                                       $    32,542     $     645,389
   Accounts receivable - net                                        14,443,649        13,806,760
   Loan receivable                                                           -            50,411
   Prepaid expenses and other                                          295,786           226,752
                                                                       -------           -------
               Total current assets                                 14,771,977        14,729,312
                                                                    ----------        ----------
Property, Plant and Equipment - Net                                  8,524,801         7,754,840

Deferred Tax Asset - Net                                             2,595,914         2,494,184

Other Assets:
   Due from officer                                                    264,125           264,125
   Deferred transaction and financing costs                            948,289           905,676
   Other                                                               394,242           464,679
   Investment in Atlantic Imaging Group, LLC ("AIG")                    64,115            94,785
   Goodwill - net                                                   12,250,152        12,421,518
                                                                    ----------        ----------
               Total other assets                                   13,920,923        14,150,783
                                                                    ----------        ----------
Total Assets                                                       $39,813,615       $39,129,119
                                                                   ===========       ===========
Liabilities and Stockholders' Equity
Current Liabilities:
   Accounts payable and accrued expenses                            $2,972,298        $2,538,156
   Current portion of capital lease obligations                      1,026,925           766,338
   Current portion of note payable                                   2,376,655         2,306,758
   Income taxes payable                                                      -             6,475
                                                                     ---------             -----
               Total current liabilities                             6,375,878         5,617,727
                                                                     ---------         ---------
Noncurrent Liabilities:
   Capital lease obligations                                         3,769,845         2,717,700
   Borrowings under revolving line of credit                         3,380,415         3,251,360
   Note payable                                                      9,703,511        10,324,538
                                                                     ---------        ----------
               Total noncurrent liabilities                         16,853,771        16,293,598
                                                                    ----------        ----------
Minority Interests                                                     382,360           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, 633.647 shares outstanding at March 31, 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 March 31, 2000 and December 31,
     1999, respectively                                                 11,357            11,357
   Additional paid-in capital                                       20,742,679        20,742,679
   Accumulated deficit                                              (4,552,493)       (4,015,105)
                                                                    -----------       -----------
               Total stockholders' equity                           16,201,606        16,738,994
                                                                    ----------        ----------
Total Liabilities and Stockholders' Equity                         $39,813,615       $39,129,119
                                                                   ===========       ===========
</TABLE>

         See accompanying notes to unaudited consolidated financial statements.


                                              3

<PAGE>









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


                                           Three Months Ended
                                                March 31,
                                               (Unaudited)
                                           2000           1999
                                           ----           ----

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

Revenues                                   $4,991,368     $6,022,502
                                           ----------     ----------
OPERATING EXPENSES:
   Salaries                                 1,601,302      1,741,835
   Other operating expenses                 1,558,179      1,741,477
   Provision for bad debts                    415,516        138,992
   Consulting and marketing fees              139,996        117,996
   Professional fees                           99,522        176,738
   Depreciation and amortization              919,310        802,409
   Interest                                   620,185        846,365
                                              -------        -------
                                            5,354,010      5,565,812
(Loss)/Income Before Minority Interests in
Joint Ventures and Income Taxes              (362,642)       456,690

Equity earnings in AIG                         14,330         23,550

Minority Interests in Joint Ventures          (58,438)      (106,470)
                                              --------      ---------
(Loss)/Income Before Income Taxes            (406,750)       373,770

Income Tax Benefit                            (91,542)      (300,818)
                                              --------     ----------
Net (Loss)/Income                            (315,208)       674,588

Preferred Dividends                           248,135        228,833
                                              -------        -------
Net (Loss)/Income Available to Common
   Shareholders                             $(563,343)      $445,755
                                            =========       ========
Net (Loss)/Income per Common Share -
   Basic                                      $(.50)          $.39
                                              ======          ====
Weighted Average Common Shares
   Outstanding - Basic                      1,135,699       1,135,699
                                            =========       =========
Net (Loss)/Income per Common Share -
   Diluted                                    $(.50)           $.33
                                              =====            ====
Weighted Average Common Shares              1,135,699       2,061,844
   Outstanding - Diluted                    =========       =========

</TABLE>

   See accompanying notes to unaudited consolidated financial statements.

                                              4

<PAGE>





              HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 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)                                                                          (315,208)                (315,208)
Amortization of unearned
compensation for stock options                                                                   25,955        25,955
Preferred dividends                                                                 (248,135)                (248,135)
                              ---------  ------- ----------- ------- ----------- -----------   --------   ------------
BALANCE, MARCH 31, 2000             634      $63   1,135,699 $11,357 $20,742,679 $(4,527,822   $(24,671)  $16,201,606
                              ========= ======== =========== ======= =========== ============  ========= =============


</TABLE>


      See accompanying notes to unaudited consolidated financial statements.

                                              5

<PAGE>





                HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                            Three Months Ended
                                                                 March 31,
                                                               (Unaudited)
                                                            2000            1999
                                                            ----            ----
<TABLE>
<CAPTION>
<S>                                                           <C>              <C>



Cash Flows From Operating Activities:
  Net (loss)/income available to common
   shareholders                                             $(563,343)       $445,755
  Adjustments to reconcile net (loss)/income
   available to common shareholders to net
   cash provided by operating activities:
     Depreciation and amortization                            919,310         802,409
     Non-cash compensation charge                              25,955               -
     Interests in joint ventures                               89,108          82,920
     Allowance for doubtful accounts                          553,000         190,000
Changes in Assets and Liabilities:
          Accounts receivable                              (1,189,889)       (361,608)
          Prepaid expenses and other                          (69,034)       (107,631)
          Deferred taxes                                     (101,730)       (332,700)
          Goodwill                                                  -         (44,699)
          Other                                                70,437         (70,076)
          Accounts payable and accrued expenses               434,142         145,369
          Income taxes payable                                 (6,475)        (39,054)
          Deferred transaction and financing costs            (42,613)         53,770
                                                              --------         ------
               Net cash provided by operating activities      118,868         764,455
                                                              -------         -------

Cash Flows from Investing Activities:
     Loan receivable                                           50,411         (49,726)
     Purchases of property, plant and equipment               (23,915)       (157,407)
                                                              --------       ---------
               Net cash provided by (used in) investing
               activities                                      26,496        (207,133)
                                                               ------        --------

Cash Flows from Financing Activities:
     Borrowings (Payments) against the revolving line
      of credit                                               129,055         (39,508)
     Capital Contributions by minority investors                    -           5,000
     Distributions to limited partners of joint ventures     (154,878)              -
     Payments on capital lease obligations                   (181,258)       (411,806)
     Payments on bridge financing                            (551,130)        (17,816)
     Payments on reserve for subleased equipment                    -        (208,268)
                                                             --------        --------
               Net cash used in financing activities         (758,211)       (672,398)
                                                             ---------       ---------

  Decrease in cash and cash equivalents                      (612,847)       (115,076)
  Cash and cash equivalents at beginning of period            645,389       1,506,123
                                                              -------       ---------
  Cash and cash equivalents at end of period                  $32,542      $1,391,047
                                                              -------      ----------

Supplemental Cash Flow Information:
  Interest paid during the period                            $574,255        $644,524
                                                             --------        --------
  Income taxes paid during the period                       $  29,795        $ 70,936
                                                            ---------        --------

Supplemental Schedule of Non-Cash Investing and Financing
Activities:
  Capital leases principally for computer and medical
   equipment                                               $1,493,990    $          -
                                                           ==========    ============
</TABLE>


             See   accompanying notes to consolidated   financial
                                   statements.

                                              6

<PAGE>




                     HEALTHCARE INTEGRATED SERVICES, INC. AND SUBSIDIARIES
                      Notes to Unaudited Consolidated Financial Statements
                               Three Months Ended March 31, 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 March 31, 2000 and the related statements of operations
and cash flows for the periods  ended  March 31, 2000 and 1999.  The Company has
recorded a net deferred tax asset of $2,595,914,  an increase of $101,730 during
the three months ended March 31, 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.  The Company had taxable income of over $1,000,000 in
1999 and over $2,000,000 in 1998.  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  $4,552,493  and  $4,015,105 at
March 31, 2000 and December 31, 1999. The increase is attributable  primarily to
the net loss  incurred by the  Company  during the first  quarter of 2000.  Cash
flows provided by operating  activities were $118,868 and $764,455 for the three
months  ended March 31, 2000 and March 31,  1999,  respectively.  The Company is
actively engaged in discussions with two financial institutions for interrim and
long-term   financing  to  help   facilitate  the  Company's   continuing   cash
requirements.

        The results of operations  for the three months ended March 31, 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 three month period ended March 31, 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 three month period ended
March 31, 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.

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


                                              7

<PAGE>




                                           For the Three Months Ended March 31,
                                       2000                                1999
                                       ----                                ----
                                                      Unaudited
<TABLE>
<CAPTION>

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

                    Income/(Loss)     Shares      Per-Share        Income       Shares      Per-Share
                      (Numerator)  (Denominator)   Amount       (Numerator)  (Denominator)   Amount
Basic EPS
Net (Loss)/Income
Available to Common
Shareholders            $(563,343)     1,135,699      $(.50)       $ 445,755     1,135,699        $.39
Add:
Preferred Dividends              -             -                     228,833             -

Effect of Dilutive
Securities
Stock Options                    -             -                           -        53,752
Series C Stock                   -             -                           -             -
Series D Stock                   -             -                           -       872,393
                      ------------ -------------                ------------ -------------
                        $(563,343)     1,135,699      $(.50)       $ 674,588     2,561,344        $.33
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 has been included in The Nasdaq Stock
Market under the symbol "HISS".

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

                                              8

<PAGE>



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  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

                                              9

<PAGE>



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  month  period  ended  March  31,  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:

                                                   Three Months   Three Months
                                                        Ended        Ended
                                                   March 31, 2000 March 31, 1999
                                                            (Unaudited)
        Net revenues:
           Diagnostic imaging                        $4,662,733      $5,754,659
           Physician management/consulting
            and clinical research                       328,635         267,843
                                                        -------         -------
           Total                                     $4,991,368      $6,022,502
                                                     ==========      ==========

        Operating (loss)/income:
           Diagnostic imaging                         $(533,849)       $326,206
           Physician management/consulting
            and clinical research                       185,537         130,484
                                                        -------         -------
           Total                                      $(348,312)       $456,690
                                                      ==========       ========

Note 7. - Acquisition of Limited Partners' Interest

        Prior to May 1,  1999,  the  Company's  MRI  facility  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% interest 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 10 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

                                              10

<PAGE>



Insurance Company, Palisades Safety and Insurance Association, 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 three
months ended March 31, 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.

Physician Management and Consulting Operations

        During fiscal 1997,  the Company  decided to expand its strategic  focus
into  the  area of  physician  management  and  consulting  and,  in  connection
therewith,  in January  1998  entered into letters of intent with respect to the
acquisition  of  all of the  outstanding  capital  stock  of  Jersey  Integrated
HealthPractice, Inc. ("JIHP"), a management services organization ("MSO") formed
and owned by Pavonia Medical  Associates,  P.A.  ("PMA") and Liberty  HealthCare
Systems,  Inc.  ("Liberty").  JIHP provides management services to PMA, which is
one  of the  largest  independent,  multi-specialty  practices  in  New  Jersey,
comprised  of over  70  physicians  servicing  over  80,000  patients  in  three
locations in New Jersey.  The  consummation  of the  transaction  was subject to
several material  conditions  including,  among others, the receipt of necessary
financing,  the  approval  of  the  issuance  of  the  stock  by  the  Company's
stockholders,  the  negotiation  of  definitive  documentation,  the  absence of
adverse changes and the satisfactory  completion of due diligence. No definitive
acquisition agreements or long-term  administrative  services agreement have yet
been  executed by all the  parties.  However,  the  Company  has been  providing
management and consulting services to PMA since April 1998.

        Given the significant  declines in the financial  performance of many of
the leading  publicly-traded  physician  practice  management  companies  during
1998-1999,  the  availability of financing for the JIHP  acquisition (as well as
other  physician  practice   acquisitions)  has  been  extremely  limited.  This
constriction in the financing market has had, and is likely to continue to have,
an

                                              11

<PAGE>



adverse  impact on the  Company's  ability  to  effect  its  physician  practice
management acquisitions. The Company is in the process of actively renegotiating
the terms of the JIHP acquisition.  The Company believes that such renegotiation
efforts will be successful and that the merger consideration, including the cash
portion, will be significantly reduced.

        Since February 1999, the Company has also been providing  management and
consulting  services  to  another  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 25 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.


                                              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  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 Three Months Ended March 31, 2000 vs. March 31, 1999

        For the three months ended March 31, 2000  revenues  were  $4,991,368 as
compared to $6,022,502  for the three months ended March 31, 1999, a decrease of
approximately  $1,031,000  or 17%.  This  decrease was primarily due to a marked
decline  in the  number of MRI and other  diagnostic  imaging  referrals  to the
Company's  New Jersey  facilities  in January 2000 which  resulted  from certain
changes enacted and penalties  implemented by automobile  insurance  carriers in
December 1999 to pre-certification requirements of diagnostic imaging procedures
and the uncertainties associated with these changes. By March 2000, revenues had
returned to a level more consistent with historical  norms. For the three months
ended March 31, 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  $602,000, and revenues
from the Company's Monmouth, Edgewater and Wayne MRI facilities had decreased by
approximately $461,000.

        For the three  months  ended March 31,  2000,  operating  expenses  were
$5,354,010 as compared to $5,565,812  for the three months ended March 31, 1999,
a decrease of  approximately  $211,802 or 4%. This decrease was primarily due to
(i)  decreased  interest  expense  (approximately  $226,000)  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  salary  expense  relating to the Beran  Facilities as a result of the
elimination  of several  management and  administrative  positions in connection
with, among other things, the consolidation of billing functions  (approximately
$141,000). These decreases in operating expenses were partially offset by (A) an
increase in depreciation and

                                              13

<PAGE>



amortization expenses relating to additional equipment acquired during the first
quarter of 2000  (approximately  $117,000),  (B) an increase in bad debt expense
relating  to  the  Beran accounts   receivable in  the (approximately $277,000),
(C) an increase in marketing  and  consulting  fees (approximately   $22,000)
and  miscellaneous  office  expenses   (approximately $20,000)  and (D) an
increase in expenses  relating to the  Company's  physician practice
management/consulting  and clinical research operations (approximately
$143,000).

Liquidity and Capital Resources of the Company
----------------------------------------------

        As of March 31, 2000, the Company had a cash balance of $32,542, current
assets of $14,771,977  and working  capital of  $8,396,099.  While the Company's
working capital benefitted 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 in January 2000, as discussed
above,  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.  By March  2000,  revenues  had
returned to a level more consistent with historical norms.

     The Company  also 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  which it  expects to consummate during the third
quarter  of  fiscal  2000,  as well as,  from  clinical  research  trials it has
recently arranged.

        Cash flows provided by operating  activities were $118,868 for the three
months  ended March 31,  2000,  which  consisted  primarily of (i) a net loss of
$563,343,  (ii)  depreciation  and amortization  expenses of $919,310,  (iii) an
increase in the allowance for doubtful accounts  receivable of $553,000 and (iv)
interests in joint  ventures of $89,108.  Other  significant  components of cash
flows  provided  by  operating  activities  include  (A) an increase in accounts
receivable,  net of  $636,889  resulting,  in part,  from a delay in  payment by
automobile  insurance  carriers  adjusting  to the  implementation  of new laws,
regulations,  and policies (B) an increase in deferred tax asset of $101,730 (C)
an increase  in prepaid  expenses  and other of $69,034,  and (D) an increase in
accounts payable and accrued expenses of $434,142.

        Cash flows provided by investing activities were $26,496,  which related
to interest  income of $50,411  associated with a $2.5 million loan to the Beran
entities in  connection  with the Beran  Acquisition  and purchases of property,
plant and equipment of $23,915.  The loan to the Beran entities 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 than 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 $758,211,  which consisted
primarily of payments on capital lease obligations of $181,258,  payments on the
DFS Loan of $551,130 and  distributions  to limited partners of joint venture of
$154,878,  all of which were partially offset by borrowings under the Company's
revolving line of credit, as discussed below of $129,055.

        In December 1997, the Company agreed to guarantee a $1.0 million loan
from DFS to Jersey Integrated HealthPractice, Inc. ("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

                                              14

<PAGE>



at $26,330 per month. At March 31, 2000,  approximately $517,159 of the loan was
outstanding.  Pavonia  Medical  Associates,  P.A.  ("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 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 March 31,  2000,  the
Company had $3,380,415 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 professional,  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

                                              15

<PAGE>



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  operations 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 Group,  LLC 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 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.
Continued expansion of the Company's  business,  including  the  expansion of
the  Company's  physician management/consulting and clinical research
operations,  will require additional sources of financing.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

        Not Applicable.

                                              16

<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 March 31, 2000.



                                              17

<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:  May 22, 2000                         /s/ Elliott H. Vernon
                                            ---------------------
                                            Elliott H. Vernon
                                            Chairman of the Board and Chief
                                            Executive Officer
                                            (Principal Executive Officer)


Date:  May 22, 2000                         /s/ Robert D. Baca
                                            ------------------
                                            Robert D. Baca
                                            President and Chief Operating
                                            Officer
                                            (Principal Financial and Accounting
                                            Officer)

                                              18