<PAGE>


                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

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

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                      OR

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

                 FOR THE TRANSITION PERIOD FROM _____ TO _____

                         Commission File No. 000-23735

                        PRECEPT BUSINESS SERVICES, INC.
              ---------------------------------------------------
            (Exact name of registrant as specified in its charter)

           Texas                                     75-2487353
 --------------------------                   -----------------------
 (State of incorporation or                      (I.R.S. Employer
       organization)                            Identification No.)

       1909 Woodall Rodgers Frwy.
             Dallas, Texas                                 75201
 ----------------------------------------               -----------
 (Address of principal executive offices)               (Zip Code)

   Registrant's telephone number, including area code:    (214) 754-6600

 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  / /

<PAGE>

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

<TABLE>
 Class                                        Outstanding as of May 15, 1998
 ------------------------                     ---------------------------------
 <S>                                          <C>
 Common Stock,  Class "A"                                43,525,577
                Class "B"                                 4,145,000
</TABLE>


                        PRECEPT BUSINESS SERVICES, INC.

                                     INDEX
<TABLE>
 PART I - FINANCIAL INFORMATION                                         Page No.
 <S>                                                                    <C>
 ITEM 1 - FINANCIAL STATEMENTS
      Consolidated Balance Sheets....................................      2
          March 31, 1998 (unaudited) and June 30, 1997 (audited)

      Consolidated Statements of Operations..........................      4
          For the three months ended March 31, 1998 (unaudited) and
          March 31, 1997 (unaudited) and for the nine months ended
          March 31, 1998 (unaudited) and March 31, 1997 (unaudited)

      Consolidated Statements of Cash Flows..........................      6
          For the nine months ended March 31, 1998 (unaudited) and
          March 31, 1997 (unaudited)

      Notes to Consolidated Financial Statements.....................      7

 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........     11

 PART II - OTHER INFORMATION

 Exhibits and Reports on Form 8-K....................................     20
 Signatures..........................................................     21
</TABLE>



                                         1

<PAGE>


 PART I - FINANCIAL INFORMATION

 ITEM 1 - FINANCIAL STATEMENTS

                        PRECEPT BUSINESS SERVICES, INC.
                          CONSOLIDATED BALANCE SHEETS

ASSETS
<TABLE>
                                                            MARCH 31,      June 30,
                                                              1998           1997
                                                           (Unaudited)     (Audited)
                                                           --------------------------
<S>                                                        <C>            <C>
Current assets:
  Cash and cash equivalents                                $ 1,675,824    $ 2,496,029
  Trade receivables, net of $242,000 and $288,000
   allowance for doubtful accounts, respectively            10,147,976      9,229,452
  Accounts receivable from affiliates                          763,724        503,571
  Other receivables                                            795,680        456,942
  Inventory                                                  4,850,407      2,569,498
  Other current assets                                         970,468        642,819
  Income taxes refundable                                      511,845        277,766
  Deferred income taxes                                      1,090,886      1,090,886
  Assets held for sale                                         748,333              -
  Net assets of discontinued operations                      1,092,416      3,560,246
                                                           --------------------------
Total current assets                                        22,647,559     20,827,209

Property and equipment, net of accumulated depreciation      4,692,407      1,857,793
Intangible assets, net of accumulated amortization          18,856,554      4,790,608
Deferred income taxes                                          615,019        615,019
Other assets                                                 2,168,521      1,200,379
                                                           --------------------------
Total assets                                               $48,980,060    $29,291,008
                                                           --------------------------
                                                           --------------------------
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
                                  STATEMENTS


                                       2

<PAGE>

                        PRECEPT BUSINESS SERVICES, INC.
                    CONSOLIDATED BALANCE SHEETS, CONTINUED


LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
                                                        MARCH 31,      JUNE 30,
                                                          1998           1997
                                                      (Unaudited)      (Audited)
                                                      --------------------------
<S>                                                   <C>            <C>
Current liabilities:
  Current portion of long-term debt                   $    45,915    $    58,160
  Current portion of capital lease obligations            434,870        185,055
  Note payable and line of credit                         847,167              -
  Trade accounts payable                                5,909,732      4,735,411
  Sales taxes payable                                     293,725      1,181,047
  Accrued compensation                                    959,766      1,132,015
  Other accounts payable and accrued expenses           7,220,970      1,192,475
                                                      --------------------------
Total current liabilities                              15,712,145      8,484,163

Long-term debt                                         13,359,505      6,984,644
Due to related party                                      965,059              -
Capital lease obligations, less current portion           726,609        517,234

Shareholders' equity:
  Class A common stock, $.01 par value:
    Authorized shares - 100,000,000
    Issued shares - 35,988,347                            359,883        263,758
  Class B common stock, $.01 par value:
    Authorized shares -  10,500,000
    Issued and outstanding shares - 10,102,997            101,030        101,030
    Additional paid-in capital                         21,650,143     17,427,653
    Accumulated deficit                                (3,703,043)    (3,475,167)
                                                      --------------------------
                                                       18,408,013     14,317,274
  Class A treasury stock, at cost:
    Shares - 478,844                                     (191,271)      (191,271)
    Shareholder notes for stock purchases                       -       (821,036)
                                                      --------------------------
Total shareholders' equity                             18,216,742     13,304,967
                                                      --------------------------
Total liabilities and shareholders' equity            $48,980,060    $29,291,008
                                                      --------------------------
                                                      --------------------------
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
                                  STATEMENTS


                                       3

<PAGE>

                        PRECEPT BUSINESS SERVICES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
                                                             NINE MONTHS ENDED
                                                                 MARCH 31,
                                                            1998           1997
                                                        --------------------------
                                                        (Unaudited)    (Unaudited)
<S>                                                     <C>            <C>
Revenues:
  Business products                                     $51,516,093    $54,106,023
  Transportation                                          5,535,704      4,870,254
                                                        --------------------------
                                                         57,051,797     58,976,277
Costs and expenses:
  Cost of goods sold                                     34,762,816     36,930,455
  Selling, general, and administrative                   20,355,433     19,701,297
  Depreciation and amortization                           1,102,454      1,082,982
                                                        --------------------------
                                                         56,220,703     57,714,734
                                                        --------------------------
Operating income                                            831,094      1,261,543

Interest expense                                            486,937        299,218
                                                        --------------------------
Income from continuing operations before
 income taxes                                               344,157        962,325
Income tax provision                                        137,663        388,394
                                                        --------------------------
Income from continuing operations                           206,494        573,931

Discontinued operations:
  Discontinuation of Precept Holdings, Inc.:
    Loss from discontinued operations, 
     net of applicable income taxes                        (455,093)      (373,430)
    Discontinuation of Precept Builders, Inc.:
    Loss from discontinued operations,
     net of applicable income taxes                               -     (2,531,590)
    Discontinuation of U.S. Trucking, Inc.:
    Income from discontinued operations,
      net of applicable income taxes                         20,723              -
                                                        --------------------------
Loss from discontinued operations                          (434,370)    (2,905,020)
                                                        --------------------------
Net loss                                                $  (227,876)   $(2,331,089)
                                                        --------------------------
                                                        --------------------------
Basic income per share data:
  Income from continuing operations                           $0.01          $0.02
  Loss from discontinued operations                           (0.01)         (0.09)
                                                        --------------------------
  Basic loss per common share                                $(0.00)        $(0.07)
                                                        --------------------------
                                                        --------------------------

Weighted average common shares outstanding - Basic       36,422,527     33,414,072
                                                        --------------------------
                                                        --------------------------
Diluted income per share data:
  Income from continuing operations                           $0.01          $0.02
  Loss from discontinued operations                           (0.01)         (0.09)
                                                        --------------------------
  Diluted loss per common share                              $(0.00)        $(0.07)
                                                        --------------------------
                                                        --------------------------

Weighted average common shares outstanding - Diluted     37,148,346     33,738,924
                                                        --------------------------
                                                        --------------------------
</TABLE>


                                        4

<PAGE>

                        PRECEPT BUSINESS SERVICES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
                                                           THREE MONTHS ENDED
                                                                MARCH 31,
                                                           1998           1997
                                                        (Unaudited)    (Unaudited)
                                                        --------------------------
<S>                                                     <C>            <C>
Revenues:
  Business products                                     $17,063,334    $16,871,051
  Transportation                                          2,109,071      1,617,162
                                                        --------------------------
                                                         19,172,405     18,488,213
Costs and expenses:
  Cost of goods sold                                     11,492,542     11,691,094
  Selling, general, and administrative                    7,018,180      6,035,958
  Depreciation and amortization                             440,764        446,831
                                                        --------------------------
                                                         18,951,486     18,173,883
                                                        --------------------------
Operating income                                            220,919        314,330

Interest expense                                            200,364         88,773
                                                        --------------------------
Income from continuing operations before
 income taxes                                                20,555        225,557
Income tax provision                                          8,538         90,223
                                                        --------------------------
Income from continuing operations                            12,017        135,334

Discontinued operations:
  Discontinuation of Precept Holdings, Inc.:
    Loss from discontinued operations, 
     net of applicable income taxes                        (210,785)       (63,679)
  Discontinuation of Precept Builders, Inc.:
    Loss from discontinued operations,
     net of applicable income taxes                               -     (2,606,243)
  Discontinuation of U.S. Trucking, Inc.
    Income from discontinued operations,
      net of applicable income taxes                         20,723             -
                                                        --------------------------
Loss from discontinued operations                          (178,045)    (2,669,922)
                                                        --------------------------
Net loss                                                $  (280,846)   $(2,534,588)
                                                        --------------------------
                                                        --------------------------
Basic income per share data:
  Income from continuing operations                           $0.00          $0.00
  Loss from discontinued operations                           (0.01)         (0.08)
                                                        --------------------------
  Basic loss per common share                                $(0.01)        $(0.08)
                                                        --------------------------
                                                        --------------------------

Weighted average common shares outstanding - Basic       37,281,667     35,875,752
                                                        --------------------------
                                                        --------------------------

Diluted income per share data:
  Income from continuing operations                           $0.00          $0.00
  Loss from discontinued operations                           (0.01)         (0.07)
                                                        --------------------------
  Diluted loss per common share                              $(0.01)        $(0.07)
                                                        --------------------------
                                                        --------------------------

Weighted average common shares outstanding - Diluted     38,223,268     36,200,604
                                                        --------------------------
                                                        --------------------------
</TABLE>
                                        5

<PAGE>

                        PRECEPT BUSINESS SERVICES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
                                                             NINE MONTHS ENDED
                                                                  MARCH 31,
                                                             1998            1997
                                                          (Unaudited)     (Unaudited)
                                                         ----------------------------
<S>                                                      <C>              <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES      $(2,326,341)       $470,783

INVESTING ACTIVITIES
Acquisitions, including earnout payments                    (782,163)       (889,181)
Proceeds from sale of property and equipment               2,819,540              -
Acquisition of property and equipment, net                  (470,843)       (851,948)
                                                         ---------------------------
Net cash provided by (used in) investing activities        1,566,534      (1,741,129)

FINANCING ACTIVITIES
Payments on long-term debt                                         -        (415,425)
Issuance of common stock                                           -          30,900
Principal payments on capitalized lease obligations          (74,193)        (61,982)
Borrowings on revolving line of credit                     3,983,185       5,984,864
Payments on revolving line of credit                      (3,969,390)     (6,189,265)
                                                         ---------------------------
Net cash used in financing activities                        (60,398)       (650,908)
                                                         ---------------------------
Net decrease in cash and cash equivalents                   (820,205)     (1,921,254)
Cash and cash equivalents at beginning of period           2,496,029       3,879,458
                                                         ---------------------------
Cash and cash equivalents at end of period               $ 1,675,824     $ 1,958,204
                                                         ---------------------------
                                                         ---------------------------
</TABLE>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
In January 1997, 3,281,502 shares of Class A Common Stock were issued in
 exchange for shareholder notes of $208,060.
During the nine months ended March 31, 1997, the Company entered into
 capitalized leases at a recorded value of $588,698.
During the nine months ended March 31, 1998 the Company entered into
 capitalized leases at a recorded value of $488,413.
During the nine months ended March 31, 1998, the Company issued $2,114,435 in
 notes payable for consideration in five acquisitions, which included $406,172
 in property and equipment.



        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED
                             FINANCIAL STATEMENTS


                                      6
<PAGE>

                        PRECEPT BUSINESS SERVICES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited financial statements 
present fairly, in all material respects, the financial position of Precept 
Business Services, Inc. ("Precept" or "Company") and the results of its 
operations and its cash flows for the nine months ended March 31, 1998 and 
1997, and, accordingly, all adjustments (which include only normal recurring 
adjustments) necessary to permit fair presentation have been made.  Certain 
information and footnote disclosures normally required by financial 
accounting principles have been condensed or omitted.  It is recommended that 
these statements be read in conjunction with the consolidated financial 
statements and notes thereto as of June 30, 1997 and for the three years then 
ended included in the Company's Form S-4 filing, which became effective 
February 9, 1998.  The results of operations for the period ended March 31, 
1998 are not necessarily indicative of the operating results for the full 
year.

2. SELECTED SIGNIFICANT ACCOUNTING POLICIES

EARNINGS PER SHARE

In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings per Share.  Statement 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share.  Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities.  Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share.  All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to
the Statement 128 requirements.

3. ACQUISITIONS

During the nine months ended March 31, 1997, the Company completed acquisitions
of certain assets of four business products distributors and one chauffeured
vehicle service company, for a total of $2,695,435, comprised of $435,000 in
cash, $2,114,435 in convertible notes payable and $146,000 in assumed debt,
plus up to $670,000 of contingent consideration based on the subsequent
operating results of the businesses over a five year period.  The acquisitions
were accounted for using the purchase method of accounting with the majority of
the purchase price attributable to customer contracts.

Effective March 19, 1997, the Company completed its acquisition of U.S. 
Transportation Systems, Inc. ("USTS"), which through March 19, 1997 was 
publicly traded on the Nasdaq Smallcap Market.  On March 20, 1998 the Company 
began trading on the Nasdaq Smallcap under the symbol PBSIA.  USTS is engaged 
in business areas which relate to transportation, including bus, chauffeured 
vehicle, package and delivery transportation-related services.  The Company 
purchased nearly all of the operating assets and assumed certain obligations 
of USTS for 9,612,500 shares of the Company's Class A Common Stock (the 
"Exchange Shares").

                                        7

<PAGE>

The Company registered the Exchange Shares and an additional approximately 20 
million Class A Common shares for acquisitions on a Form S-4 registration 
statement with the Securities and Exchange Commission.  The acquisition was 
accounted for using the purchase method of accounting, with resulting 
goodwill of approximately $12 million to be amortized over 20 years on a 
straight-line basis.  USTS' results of operations have been included in the 
Company's Consolidated Statement of Operations since March 20, 1998.

Subsequent to the acquisition of USTS, the Company determined to divest of its
75% ownership in U.S Trucking, Inc. ("USTI"), which represents the long-haul
delivery transportation related services segment of USTS.  The results of
operations of USTI have been classified as discontinued operations in the
accompanying financial statements.  Similarly, the net assets of USTI have been
recorded at their estimated net realizable value of $200,000 and have been
classified as net assets of discontinued operations.  The disposition of USTI
is expected to occur prior to June 30, 1998.

The following table presents the unaudited pro forma results of operations as
if the USTS acquisition had occurred at the beginning of each respective period
presented.  These pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of what would have occurred had the
acquisition been made as of those dates or of results which may occur in the
future.

The unaudited pro forma table below presents the nine month results of 
Precept ending March 31, 1998 as presented in its Consolidated Financial 
Statements and explained in its MD&A.  The Compny believes these results are 
indicative of the Company operating as a privately held entity for the nine 
months ending March 31, 1998.  USTS is presented for the same nine month 
period and includes significant one-time writedowns of assets, which include 
the ASI note ($5.8 million), investment in Packaging Plus ($1.0 million), a 
write off of other notes receivable, prepaid assets and inventory and 
additional bad debt accrual.  These one time write downs and write offs 
explain the substantial loss incurred by USTS and the resulting goodwill 
recorded in the purchase accounting described above.


                                        8
<PAGE>

<TABLE>
Nine Months Ended
 March 31, 1998

                                                  Precept          USTS          Combined
                                                -------------------------------------------
<S>                                             <C>            <C>             <C>
Total revenues                                  $57,051,797    $ 18,955,062    $ 76,006,859
                                                -------------------------------------------
                                                -------------------------------------------

Income (loss) from continuing operations           $206,494    $ (7,847,339)   $ (7,640,845)
Loss from discontinued operations                  (434,370)     (4,196,291)     (4,630,661)
                                                -------------------------------------------
Net Loss                                        $  (227,876)   $(12,043,630)   $(12,271,506)
                                                -------------------------------------------
                                                -------------------------------------------

Loss per common share: Basic
Loss from continuing operations                                                   $(0.17)
Loss from discontinued operations                                                  (0.10)
                                                                               ------------
                                                                                  $(0.27)
                                                                               ------------
                                                                               ------------
Loss per common share: Diluted
Loss from continuing operations                                                   $(0.17)
Loss from discontinued operations                                                  (0.10)
                                                                               ------------
                                                                                  $(0.27)
                                                                               ------------
                                                                               ------------

Nine Months Ended
   March 31, 1997

                                                  Precept          USTS          Combined
                                                -------------------------------------------
Total revenues                                  $58,976,277    $ 22,215,257    $ 81,191,534
                                                -------------------------------------------
                                                -------------------------------------------

Income (loss) from continuing operations        $   573,931    $ (4,426,562)   $ (3,852,331)
Loss from discontinued operations                (2,905,020)     (3,791,259)     (6,696,279)
                                                -------------------------------------------
Net Loss                                        $(2,331,089)   $ (8,217,821)   $(10,548,610)
                                                -------------------------------------------
                                                -------------------------------------------


Loss per common share: Basic
Loss from continuing operations                                                   $(0.08)
Loss from discontinued operations                                                  (0.15)
                                                                               ------------
                                                                                  $(0.23)
                                                                               ------------
                                                                               ------------
Loss per common share: Diluted
Loss from continuing operations                                                   $(0.08)
Loss from discontinued operations                                                  (0.15)
                                                                               ------------
                                                                                  $(0.23)
                                                                               ------------
                                                                               ------------
</TABLE>

                                       9
<PAGE>

4. DISCONTINUED OPERATIONS

In February, 1997, the Company decided to reduce its investment in Precept 
Builders, Inc. ("Builders"), an indirect subsidiary of Precept that performed 
construction activities. The Company owned 810 shares of Builders common 
stock, making it an 81% shareholder of Builders. Effective March 31, 1997, 
the Company obtained an additional 1,000 shares, increasing its ownership to 
90.5%, in exchange for a contribution of capital of approximately $2.3 
million. As of June 30, 1997, Builders expected to offer 100,000 shares of 
its common stock in a private offering to the 

shareholders of the Company, diluting the Company's ownership percentage to 
1.8%.  Consequently, in accordance with Accounting Principles Board Opinion 
No. 30, Reporting the Results of Operations--Discontinued Events and 
Extraordinary Items, the Company recorded the net assets of Builders at the 
estimated expected value remaining at the disposal date, which was zero. On 
December 2, 1997, the private offering was consummated.

During February 1997, the Company also decided to sell nearly all of the 
assets of Precept Holdings, Inc. ("Holdings"), which owns and operates 
certain other real estate-related investments.  The assets to be sold include 
two condominiums, a ranch, a restaurant, and a luxury suite at a local racing 
facility.  The assets will be sold to entities controlled by certain officers 
and directors of the Company.  During October 1997 and February 1998, the 
ranch was sold for $1.2 million in cash and the condominiums were sold for 
$1.6 million in cash, respectively.

5. SUBSEQUENT EVENTS


On April 13, 1998 the Company acquired InfoGraphix, Inc., a business products 
distributor. The Company issued 2,058,077 shares of Class A Common Stock in 
the combination.  The transaction will be accounted for using the pooling of 
interests method of accounting.

                                       10
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS


     The following discussion of Management's Discussion and Analysis of 
Financial Condition and Results of Operations of the Company should be read 
in conjunction with the information contained in the Company's consolidated 
financial statements, including the notes thereto, and the other financial 
information appearing elsewhere in this report.  Statements regarding future 
economic performance, management's plans and objectives, and any statements 
concerning its assumptions related to the foregoing contained in Management's 
Discussion and Analysis of Financial Condition and Results of Operations 
constitute forward-looking statements.  The Company's actual results, 
performance or achievements could differ materially from the results 
expressed in, or implied by, these forward-looking statements.  The Company 
does not undertake any obligation to revise these forward-looking statements 
to reflect any future events or circumstances.  Unless otherwise indicated or 
the context otherwise requires, each reference to a year is to the Company's 
fiscal year which ends on June 30 of such year.

     The financial information presented herein contains the results of the 
Company's operations as a privately held entity prior to March 20, 1998 when 
the Company acquired the business of U.S. Transportation Systems, Inc. and 
when there became a public market for the Company's Class A common stock.

GENERAL

     The Company is a leading independent distributor of custom and stock 
business products and provider of document management services ("Business 
Products") to businesses in a variety of industries throughout the United 
States.  The Company also operates various corporate transportation services 
within several metropolitan areas ("Transportation Services").  The Company 
was founded in 1988 as a subsidiary of Affiliated Computer Services, Inc. 
("ACS") (NYSE: AFA) and has grown significantly since then, both internally 
and through acquisitions.  In June 1994, the Company was spun-off from ACS in 
a tax-free stock exchange to the original ACS shareholders in connection with 
the initial public offering of ACS.

                                      11
<PAGE>

ACQUISITIONS

     Since 1991, the Company has acquired 16 companies operating in the 
Business Products industry. During the fiscal year 1998 through May 15, 1998, 
the Company completed five of the acquisitions discussed above, representing 
approximately $32 million in annual revenue.  Three of the five acquisitions 
were completed with a combination of cash and convertible notes, one for all 
cash and one for all stock.  Four acquisitions were accounted for using the 
purchase method of accounting and one using the pooling method of accounting. 
 Accordingly, under the purchase method the results of the acquired 
operations are included in the Company's consolidated results of operations 
from the date of acquisition.  Under the pooling method of accounting the 
results of the Company's operations are restated to include the historical 
financial results of the acquisition.  Since the acquisition under the 
pooling method was completed subsequent to the March 31 quarter end, the 
Consolidated Financial Statements do not include its operating results.

     During November 1997, the Company acquired one transportation entity for 
a convertible note using the purchase method of accounting. This acquisition 
represents approximately $1 million in revenue.  Effective March 19, 1998 the 
Company completed its acquisition of U.S. Transportation, Inc. ("USTS"), 
structured as a tax-free merger, under a Triangular C Reorganization. The 
Company acquired the assets and certain liabilities of USTS in exchange for 
Precept Class A Common Stock.  Under the Triangular C Reorganization, USTS is 
required to liquidate as a corporation.  As part of the liquidation process, 
USTS distributed the Company's shares to its shareholders.  The Company 
registered the Class A Common Stock distributed to USTS shareholders on a 
Form S-4 registration statement with the Securities and Exchange Commission.  
The USTS acquisition was accounted for using the purchase method of 
accounting. Under the purchase method of accounting, only operations for the 
11 days beginning March 20, 1998 are included in the Consolidated Statements 
of Operations of the Company.  Continuing operations of USTS represent 
approximately $9.5 million in revenue.

     As a result of all the various acquisitions stated above, the historical 
operating results of the Company for a given period may not be comparable to 
prior or subsequent periods.

     Except where specifically noted, the Discussion and Analysis of 
Financial Condition and Results of Operations that appears below covers only 
the Company's continuing operations.  For additional information about the 
results of discontinued operations, see Note 3 and 4 of the Company's "Notes" 
to consolidated financial statements and discussion of "Discontinued 
Operations" below.

                                      12
<PAGE>

RESULTS OF OPERATIONS

     Three Months Ended March 31, 1998 Compared to Three Months Ended March 
31, 1997

REVENUE

     Revenues from continuing operations increased $684 thousand to $19.2 
million for the three months ended March 31, 1998.  These revenues include 
eleven days of revenues from the acquired operations of USTS.  This 
represents a 4% increase compared to the period ended March 31, 1997, which 
reflected $18.5 million.

BUSINESS PRODUCTS.  Revenues for Business Products during the three month 
period ended March 31, 1998 were $17.1 million, a $192 thousand increase from 
the same reporting period in 1997.  This increase is the result of growth 
from existing operations, as there were no Business Product acquisitions 
during the three month period ending March 31, 1998.

TRANSPORTATION.  Transportation revenues were $2.1 million, a $492 thousand 
increase from the same reporting period in 1997.  These revenues include 
eleven days of revenues from the acquired operations of USTS which were $202 
thousand. The balance was from internal growth.  During this period, certain 
low margin accounts were discontinued, resulting in a lower increase in 
revenue from internal growth.

OPERATING COSTS AND EXPENSES

BUSINESS PRODUCTS.  One of the major expenses for Business Products is cost 
of goods.  For the three month period ended March 31, 1998, cost of goods 
decreased by $199 thousand while sales revenue increased $192 thousand.  This 
resulted in a 1.9% increase in gross profit (revenues less cost of goods) 
when compared to the same reporting period in 1997.  Sales commissions for 
Business Products rose in direct proportion to increased revenue for the period
due to all sales personnel being compensated on a straight commission basis.

TRANSPORTATION.  For the reporting period, overall operating expenses 
remained constant when compared to the period ended March 31, 1997.  A soft 
petroleum market and expense reduction programs accounted for the ability to 
maintain expense levels.

                                      13
<PAGE>


SELLING GENERAL AND ADMINISTRATIVE EXPENSES

BUSINESS PRODUCTS.  General and administrative expenses ("G&A") for the 
reporting period were $2.9 million.  This represents a 17.5% or $439 
thousand increase when compared to the same period for 1997.  The increase was 
primarily due to the creation and enhancement of the legal, financial and 
information system functions of the Company in preparation of the Company 
becoming publicly traded.  Selling expenses or commissions earned for the 
period were $2.1 million compared to $2.2 million for the same period in 1997.

TRANSPORTATION.  Selling, general and administrative expenses in the 
transportation group for the period ending March 31, 1998 were $2.0 million, 
a $32 thousand increase from the same period in 1997.  These expenses include 
eleven days of USTS selling, general and administrative expenses which were 
$157 thousand, including one time expenses connected with the sale of USTS 
operations to the Company.  The remainder of the increase was primarily due 
to the restructuring and integration expenses associated with the chauffeured 
vehicle service company acquisition.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses for the reporting period 
decreased $6 thousand to $441 thousand from $447 thousand reported in the 
same period of 1997.

OPERATING INCOME

     Operating income for the three months ended March 31, 1998 declined $93 
thousand.  This was a direct result of G & A expenditures incurred to 
facilitate the USTS acquisition and the unforecasted one time G & A expenses 
of USTS for the eleven days included in this reporting period.

INTEREST EXPENSE

     Interest expense for the period increased $112 thousand to $200 
thousand.  This increase was a reflection of additional debt incurred for 
acquisition purposes.


TAX PROVISION

     For the three months ended March 31, 1998, the Company reflected a $9 
thousand provision for federal income tax as compared to a $90 thousand 
provision for the same period in 1997.

NET INCOME

     For the three months ended March 31, 1998, net income declined to $221 
thousand from $314 thousand.  This decline is primarily attributable to 
expenses associated with the acquisition of USTS and four other companies 
during the period.

                                      14
<PAGE>

     Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 
1997

REVENUE

     Consolidated revenues from continuing operations decreased $1.92 million 
or 3.2% for the nine months reporting period when compared to the similar 
period in 1997.  This decrease was due to the loss of three Business Products 
customers to competition during the period.  As reflected by the increase in
revenue for the quarter ended March 31, 1998, the Company believes it has 
taken the necessary steps to replace this revenue through acquisitions and 
internal growth.  Transportation revenues reflected a $731 thousand increase 
primarily from internal growth.


OPERATING EXPENSES

COST OF GOODS

     Cost of goods in Business Products decreased to $34.7 million from $36.9
million during the nine month period ended March 31, 1998.  The greater portion
of this reduction is due to a lesser volume of goods procured by virtue of 
decreased sales revenue.  However, during this period the overall cost of 
goods as a percent of revenue decreased approximately 1%, resulting in higher 
gross profits.

SELLING GENERAL & ADMINISTRATIVE EXPENSES

BUSINESS PRODUCTS.  G & A expenses for this nine month reporting period rose 
$81 thousand to $8.5 million when compared to the same period in 1997.  This 
reflects less than a 1% growth in overall G & A expenses for the nine month 
period.

     The decrease in selling expenses is directly proportionate to Business 
Products revenue due to all sales personnel being compensated on a straight 
commission basis.  For the nine month period ended March 31, 1998, 
commissions paid were $6.6 million as compared to $7.2 million for the same 
period of 1997.

TRANSPORTATION.  Selling, general and administrative expenses for 
transportation operations increased $300 thousand during the nine month 
period ended March 31, 1998 to $5.2 million from $4.9 million.  As discussed 
above, results for the nine months ended March 31, 1998 reflect only 11 days 
of USTS operations. Of the reported increase for the period ended March 31, 
1998, USTS incurred $97 thousand of one time expenses connected with the sale 
of USTS operations to Precept.  All other transportation operations increased 
selling, general and administrative expenses $204 thousand for the nine 
months reporting period, attributable directly to supporting the $731 
thousand revenue growth.

                                      15
<PAGE>

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense remained virtually unchanged for 
the reporting period when compared to the same period in 1997.

OPERATING INCOME

     Operating income for the reporting period declined by $430 thousand from 
the same period in 1997.  This was a direct result of decreased customer 
revenues in Business Products for the first six months of the fiscal year.  
As reflected in the consolidated statement for the three months ended March 
31, 1998, the necessary steps have been put in place by the Company to replace
this revenue loss.

INTEREST EXPENSE

     Interest expense for the nine month period increased $188 thousand to 
$487 thousand. This was due primarily to additional debt incurred for the 
five (5) acquisitions reported in a prior section.

TAX PROVISION

     The company's effective tax rate was approximately 40%, unchanged for 
the reporting period.

NET INCOME FROM CONTINUING OPERATIONS

     As a result of the foregoing, net income from continuing operations 
decreased to $206.5 thousand for the period from $574 thousand reported for 
the nine months ended March 31, 1997.

CAPITAL RESOURCES AND LIQUIDITY

     The Company's primary sources of funding have been cash flow from 
operations, commercial bank credit facilities and convertible notes issued by 
the Company to sellers of acquired companies.  The Company anticipates that 
cash flow from operations and borrowings under its credit facility will be 
its principal sources of funding.  The Company's principal uses of cash have 
been, and will continue to be, the funding of acquisitions, repayment of 
debt, and capital expenditures for its information and accounting systems.

     In the nine months ended March 31, 1998, five acquisitions were 
completed for total consideration of approximately $2.5 million.  Of the 
total consideration paid for the acquisitions, approximately $435 thousand 
was in cash and approximately $2.1 million was in the form of convertible 
debt.  The cash portion of the consideration paid for the acquisitions was 
provided by proceeds from the Company's Senior Credit Facility.

                                      16
<PAGE>

     A First Amendment to the Credit Agreement with Wells Fargo Bank, Texas 
was signed on March 20, 1998, consisting of a $5 million increase to a $15.0 
million secured revolving credit facility ("Senior Credit Facility"), which 
expires March 31, 2001. Borrowings under the Senior Credit Facility bear 
interest at Prime or LIBOR plus 1.75%, 2.25%, 2.50% or 2.75% dependent upon a 
financial ratio of the Company calculated at the beginning of each month.  
The Senior Credit Facility is fully secured by substantially all of the 
assets of the Company. Availability under the Senior Credit Facility is 
calculated based upon a borrowing base composed of receivables and inventory.

     The Company incurs capital expenditures primarily for its information 
and accounting systems needs.  Capital expenditures, from continuing 
operations, for the nine months ended March 31, 1998, were $566 thousand.  
The majority of capital expenditures related to the purchase of capitalized 
software and computer equipment.

     The Company had cash and cash equivalents totaling $1.7 million at March 
31, 1998 compared to $2.5 million at June 30, 1997. The reason for the 
decrease was cash utilized in acquisitions, expenses associated with the USTS 
transaction, capital expenditures and reduction of accrued sales tax 
liability.

     Working capital at March 31, 1998 was $7.5 million, comparable to 
working capital at June 30, 1997 of $12.3 million.  The primary reason for 
the decrease is due to the acquisition of USTS and the assumption of certain 
of its liabilities.  The Company's capitalization, defined as the sum of 
long-term debt and shareholders' equity at March 31, 1998 was approximately 
$32.5 million.

     The Company's EBITDA, defined as income excluding interest, taxes, 
depreciation and amortization of goodwill and other intangible assets, was 
$1.9 million for the nine months ended March 31, 1998 compared to $2.3 
million for the nine month period ended March 31, 1997.  Management has 
included EBITDA in its discussion herein as a measure of liquidity because it 
believes that it is a widely accepted financial indicator of a company's 
ability to service and/or incur indebtedness, maintain current operating 
levels of fixed assets and acquire additional operations and businesses.  
EBITDA should not be considered as a substitute for statement of operations 
or cash flow data for the Company's consolidated financial statements, which 
have been prepared in accordance with generally accepted accounting 
principles.

     The Company's management believes that capital requirements, other than 
funding of acquisitions, will be met from cash generated from continuing 
operations and additional financing available under the Senior Credit 
Facility. Favorable acquisition or expansion opportunities requiring large 
commitments of capital may arise that the Company may be unable to finance 
internally.  In order to pursue such opportunities, the Company may be 
required to incur additional debt or to issue Common Stock, which would have 
a dilutive effect on existing shareholders.  However, the portion of future 
acquisition costs, which will be funded with such Common Stock, is dependent 
upon the seller's willingness to accept the stock as consideration and the 
Company's willingness to 

                                      17
<PAGE>

issue such stock based on the market price of the stock.  No assurance can be 
given as to the Company's future acquisition and expansion opportunities.

INCOME TAXES

     At March 31, 1998, the Company had $2.3 million of gross deferred tax 
assets.  The Company had evaluated its deferred tax assets both individually 
and in the aggregate as to the likelihood of realizability of these amounts, 
and has concluded that there are no specific realizability issues related to 
any one type of temporary difference that gave rise to the deferred tax 
assets. However, the Company has concluded that it is more likely that some 
portion of its deferred tax assets will not be realized.  After considering 
the sources of taxable income that may be available, the Company estimates 
that it will not realize $637 thousand of its deferred tax assets, for which 
a valuation allowance is recorded.

DISCONTINUED OPERATIONS

     As part of its business strategy, the Company decided in fiscal 1997 to 
focus on its core businesses and discontinue certain business operations.  To 
effect this strategy the Company decided to reduce its investment in its real 
estate construction operation, Precept Builders, Inc. ("Builders"), which 
performs free-standing construction and finish-out of existing locations, 
primarily in the state of Texas, and to sell nearly all of the assets of 
Precept Holdings, Inc. ("Holdings"), which owns and operates certain other 
real estate-related investments.  The assets to be sold of Holdings include 
two condominiums, a ranch, a restaurant, and a luxury suite at a local racing 
facility.

     During December 1997, the private offering of Builders was completed. 
During October 1997 and February 1998, the ranch and condominiums of Holdings 
were sold for $1.2 million and $1.6 million in cash, respectively.  The sale 
of various other assets is expected to be completed by June 30, 1998.  These 
assets will be sold for cash.

     Subsequent to the acquisition of USTS, the Company determined to divest 
of its 75% ownership in USTI, which represents the long-haul delivery 
transportation related services segment of USTS.  Management of the Company 
believed USTI could not provide an adequate return to Precept shareholders. 
The Company has executed a definitive agreement to sell the stock of USTI for 
$1.95 million.  The Company will receive $200,000 in cash and a $1.75 million 
promissory note.  The note would be fully due and payable in two years.  The 
sale of USTI is expected to be completed prior to June 30, 1998.  The results 
of operations of USTI have been classified as discontinued operation in the 
Company's Consolidated Statements of Operations.  Similarly, the net assets 
of USTI have been recorded at their estimated net realizable value and have 
been classified as net assets of discontinued operations.

                                      18
<PAGE>

YEAR 2000 COMPLIANCE

     As of March 31, 1998, all of the Company's software utilized in 
accounting and operations has been licensed from third-party vendors and is 
certified as year 2000 compliant.

INFLATION

     Certain of the Company's product offerings, particularly paper products, 
have been and are expected to continue to be subject to significant price 
fluctuations due to inflationary and other market conditions.  The Company 
generally is able to pass such increased costs on to its customers through 
price increases, although it may not be able to adjust its prices 
immediately. Significant increases in paper, fuel and other costs in the 
future could materially affect the Company's profitability if these costs 
cannot be passed on to customers.  In general, the Company does not believe 
that inflation has had a material effect on its results of operations in 
recent years.  However, there can be no assurance that the Company's business 
will not be affected by inflation in the future.


                                      19
<PAGE>


PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS - None

ITEM 2.   CHANGES IN SECURITIES - None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          None

ITEM 5.   OTHER INFORMATION - None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

 2.1 Agreement and Plan of Reorganization dated as of November 16, 1997 by and
     among U.S. Transportation Systems, Inc. Precept Investors, Inc. and
     Precept Acquisition Company, L.L.C. (1)
 2.2 Plan of Liquidation and Dissolution (1)
 2.3 Stock Purchase Agreement by and among Precept Business Products, Inc.,
     Precept Business Services, Inc., InfoGraphix, Inc. and James Gorin (3)
 3.1 Amended and Restated Articles of Incorporation (1)
 3.2 Bylaws (1)
 4.1 Warrant Agent Agreement (1)
 4.2 Form of Precept Class A Warrant Certificate (1)
 4.3 Form of Precept Class A Common Stock Certificate (1)
 4.4 Form of Rights Agreement between Precept and Continental Stock Transfer &
     Trust Co. (1)
 4.5 Form of Irrevocable Proxy granted to Darwin Deason by various Precept
     Investors shareholders (1)
10.1 Form of Registration Rights Agreement by and among Precept Investors, Inc.
     Michael Margolies and The Margolies Family Trust (1)
10.2 Form of Employment Agreement by and between Precept Investors, Inc. and
     Michael Margolies (1)
10.3 Form of Employment Agreement by and between Precept Investors, Inc. and
     ron Sorci (1)
10.4 Reciprocal Services Agreement, dated June 30, 1994, between Precept and
     ACS (1)
10.5 Form of Directors Indemnification Agreement (1)
10.6 Precept 1996 Stock Option Plan (1)
10.7 Precept 1998 Stock Option Plan (1)
10.8 Credit Agreement and Line of Credit Note, dated as of July 1, 1997,
     between Precept Investors, Inc. and Wells Fargo Bank (Texas), National
     Association (1)
10.9 First Amended and Restated Credit Agreement and Line of Credit Note, dated
     March 20, 1998, between Precept Business Services, Inc. and Wells Fargo 
     Bank (Texas), National Association (2)
11.1 Statement re Computation of U.S. Transportation Systems, Inc. Per Share
     Earnings (1)
27.1 Financial Data Schedule (4)
-------------------------------
  (1)  Previously filed as an exhibit to the Company's registration statement on
       Form S-4 (file no. 333-42689) and incorporated herein by reference

  (2)  Previously filed as an exhibit to the Company's Form 10-Q for the
       quarterly period ended December 31, 1997

  (3)  Previously filed as an exhibit to the Company's Form 8-K dated April 28,
       1998
 
  (4)  Filed herewith

                                      20

<PAGE>

(b) Reports on Form 8-K
      The Company did not file any reports on Form 8-K during the three months
      ended March 31, 1998.  On April 28, 1998, the Company filed a report on
      Form 8-K in connection with its acquisition of all of the issued and 
      outstanding stock of InfoGraphix, Inc.



                                  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.

                                   PRECEPT BUSINESS SERVICES, INC.


Date: May 15, 1998                 By: /S/ David L. Neely
                                       David L. Neely
                                       Chairman & Chief Executive Officer

                                   By: /s/ Scott B. Walker
                                       Scott B. Walker
                                       Senior Vice President &
                                       Chief Financial Officer



                                      21