U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB

             [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                    For quarterly period ended December 31, 1997

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from ......... to ...............

                          Commission File No.: 0-22254

                       INTELLIGENT DECISION SYSTEMS, INC.
        (Exact name of small business issuer as specified in its charter)

                DELAWARE                                38-3286394
      (State or other jurisdiction of      (I.R.S. Employer Identification No.)
       incorporation or organization)


                                 88 Danbury Road
                            Wilton, Connecticut 06987
                    (Address of Principal Executive Offices)

                                  203-761-1057
                            (Issuer's Telephone No.)


                                 No Changes
       (Former name and former fiscal year if changed since last report)
                                  
 
           
            
     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days: Yes [x] No [
].


                    APPLICABLE ONLY TO CORPORATE ISSUERS:

      State the number of shares  outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date.

Title of Class: Common Stock

Shares outstanding at:   February 12, 1998: 18,424,883                   

Transitional Small Business Disclosure Format:    Yes [  ];  No [x]



<PAGE>



                      INTELLIGENT DECISION SYSTEMS, INC.


                                  I N D E X

PART  I                 FINANCIAL INFORMATION                    PAGE NO.


      Item 1.  Financial Statements

             Condensed Consolidated Balance Sheets
               December 31, 1997 and June 30, 1997                    1

             Condensed Consolidated Statements of Operations
               for the  three and six months ended December 31,
               1997 and December 31, 1996                             3

             Condensed Consolidated Statements of Cash Flows
               for the six months ended  December
               31, 1997 and December 31, 1996                         4

             Notes to Condensed Consolidated Financial
               Statements                                             5




      Item 2. Management's Discussion and Analysis or Plan
               of Operation                                           8

PART  II                OTHER INFORMATION

      Item 1.  Legal Proceedings                                      13
      Item 2.  Changes in Securities                                  13
      Item 3.  Defaults Upon Senior Securities                        13
      Item 4.  Submission of Matters to a Vote of Security Holders    13
      Item 5.  Other Information                                      13
      Item 6.  Exhibits and Reports on Form 8-K                       13

      Signatures                                                      14






<PAGE>

Part I. - Financial Information

Item 1.  Financial Statements


              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

                                     ASSETS

                                                 Dec. 31,            June 30,
                                                   1997                1997
                                               ------------        ------------
                                               (unaudited)

CURRENT ASSETS
     Cash and cash equivalents                $     23,895         $   355,009
     Accounts Receivable
       Trade, net of allowance for doubtful
         accounts of $16,598 and $16,598,
         respectively                               39,539             123,795
     Net investment in direct
       finance leases, current portion              84,101             342,205
     Inventories                                    70,475              53,534
     Contractual rights                            324,367             420,282
     Prepaid expenses                               13,000              36,740
                                                 ---------           ---------
TOTAL CURRENT ASSETS                               555,377           1,331,565

PROPERTY AND EQUIPMENT, NET                        304,512             392,412

OTHER ASSETS
     Contractual rights                              3,904              24,604
     Net investment in direct finance
       leases, net of current portion              192,619             199,914
     Intellectual property - net of
      amortization                               1,190,476           1,369,048
     Other - net of amortization                   150,234             157,033
                                                 ---------           ---------
                                               $ 2,397,122          $3,474,576
                                                 =========           =========







The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.




                                        1
<PAGE>



              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

                    LIABILITIES AND STOCKHOLDERS' EQUITY

                                                 Dec. 31,            June 30,
                                                   1997                1997
                                               -----------        ------------
                                               (unaudited)
CURRENT LIABILITIES
     Notes payable                             $   484,693         $         0
     Related party notes payable                   358,001              30,553
     Accounts payable                              928,772             890,388
     Accrued expenses                              454,775             702,702
     Long term obligations, current                195,407             121,355
                                                ----------          ----------

     TOTAL CURRENT LIABILITIES                   2,421,648           1,744,998

LONG-TERM OBLIGATIONS, net of current portion      185,795             333,338

COMMITMENTS AND CONTINGENCIES                            0                   0

STOCKHOLDERS' EQUITY
     Preferred stock; $.001 par value;
       1,000,000 and 1,000,000 shares
       authorized; 0 and 0 shares
       issued and outstanding;
       cumulative, 7% payable annually                   0                   0
     Additional paid-in capital - preferred              0                   0
     Common stock; $.001 and 30,000,000 and
       30,000,000 shares authorized;
       16,471,697 and 14,548,196
       shares issued and outstanding                16,472              14,548
     Additional paid in capital - common        13,561,360          13,076,276
     Accumulated deficit                       (13,788,153)        (11,694,584)
                                                ----------          ----------
TOTAL STOCKHOLDERS' EQUITY                        (210,321)          1,396,240
                                                ----------          ----------

                                               $ 2,397,122         $ 3,474,576
                                                ==========          ==========

The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.



                                        2
<PAGE>



              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                      Three Months Ended            Six Months Ended
                                          Dec. 31,                      Dec. 31,                     
                                   ------------------------     ------------------------
                                      1997           1996          1997           1996
                                  ---------      ---------      ---------      ---------
<S>                             <C>            <C>            <C>           <C>    

Revenues                        $   113,321    $   410,927    $   378,140   $    626,050  

Costs of Goods and Services          17,065        446,956        415,174        791,969
                                  ---------      ---------      ---------      ---------
Gross Profit (Loss)                  96,256        (36,029)       (37,034)      (165,919)

Expenses
  Selling                           193,428        389,257        463,593        594,997
  Administration                    379,470        330,557        748,465        768,927
  Research & development             43,621        231,701        214,578        423,759
  Depreciation & amortization       147,511        152,565        296,835        290,992
  Interest expense                  280,622          2,394        315,349         10,849
                                  ---------      ---------      ---------      ---------
                                  1,044,652      1,106,474      2,038,820      2,089,524

Net loss from operations           (948,396)    (1,142,503)    (2,075,854)    (2,255,443)      

Other income (expense)              (23,827)        33,373        (17,715)        68,623

                                  ---------      ---------      ---------      ---------
Net loss                        $  (972,223)   $(1,109,130)   $(2,093,569)   $(2,186,820)
                                  =========      =========      =========      =========

Net loss per share                 $(0.06)        $(0.08)        $(0.14)        $(0.16)
                                     ====           ====           ====           ====
Weighted average
 shares outstanding              15,668,567      14,303,232     15,175,048     13,599,583
                                 ==========      ==========     ==========     ==========
</TABLE>



The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.



                                        3
<PAGE>


              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

                                        Six Months Ended
                                          Dec. 31,
                                   ------------------------
                                      1997           1996
                                   ---------      ---------

Net cash flows from
     operating activities        $(1,447,140)   $(2,566,396)

Net cash flows from
     investing activities            265,376       (142,470)

Net cash flows from
     financing activities            850,650        878,222
                                   ---------      ---------
Net change in
     cash and equivalents           (331,114)    (1,830,644)
Beginning cash and equivalents       355,009      3,064,329
                                   ---------      ---------
  Ending cash
     and equivalents             $    23,895    $ 1,233,685
                                   =========      =========










The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.



                                        4

<PAGE>


              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------


Note A -- Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and with the  instructions  contained in Regulation S-B.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the three and six month periods  ended  December 31, 1997
are not necessarily  indicative of the results that may be expected for the year
ending June 30, 1998. The unaudited  condensed  financial  statements  should be
read in conjunction with the financial  statements and notes thereto included in
the Company's annual report on Form 10-KSB for the year ended June 30, 1997. The
year end condensed consolidated balance sheet was derived from audited financial
statements,  but does not include all disclosures required by generally accepted
accounting principles.

Note B -- Stockholders' Equity

Changes in stockholders' equity for the six months ended December 31, 1997 are:

<TABLE>
<CAPTION>
                                   Common Stock
                         -------------------------------
                                              Additional                        Total
                                               Paid-in      Accumulated      Stockholders'
                           Shares     Amount    Capital       Deficit          Equity

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

Balance, June 30,
  1997                  14,548,196   $14,548  $13,076,276   $(11,694,584)    $1,396,240

Exercise of
  warrants and options     200,000       200      111,800                       112,000

Stock issued
  for services           1,723,501     1,724      135,726                       137,450

Stock options
  issued for services                               5,000                         5,000

Stock option
  exercise price
  reductions granted
  for services,
  interest and 
  settlements                                     232,558                       232,558
 
Net loss                                                      (2,093,569)    (2,093,569)
                        ----------    ------   ----------     ----------     ----------
Balance, Dec. 31,
  1997                  16,471,697   $16,472  $13,561,360   $(13,788,153)   $  (210,321)
                        ==========    ======   ==========     ==========     ==========
</TABLE>
                                       5
<PAGE>

              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note C -- Earnings Per Share Computation

Earnings per share  amounts are based on the weighted  average  number of shares
outstanding exclusive of warrants and options in view of the fact that inclusion
of these common stock equivalents would be anti-dilutive.

Note D -- Related Party Transactions

During the Six months ended December 31, 1997, Mid America Venture Capital Fund,
Inc. ("Mid America"),  an affiliate through stock ownership of more than ten per
cent of the Company's  outstanding common shares, loaned the Company $327,448 in
exchange for notes payable (which are payable upon demand) collateralized by all
assets of the Company.  The loans were in addition to previous loans outstanding
at June 30, 1997 of $30,553,  which are also collateralized by all assets of the
Company.  On September 22, 1997, the Company  granted to Mid America  Venture an
option  to  purchase  150,000  shares of common  stock at an  exercise  price of
$.50/share as consideration for loans made to the Company by Mid America Venture
Capital Fund, Inc. On December 5, 1997, in  consideration  for loans made and to
be made,  the Company  entered into an agreement  with Mid America which granted
conversion  rights of all current or future debt  outstanding  into an amount of
common shares equal to the debt to be converted,  if any,  divided by the lowest
price per share during the twelve months  immediately  preceding the  conversion
date.  These stock  conversion  rights  expire on December 4, 1999.  The Company
recorded a charge to interest expense of $177,170, as a result of the grant.

Note E -- Commitments and Contingencies

In June  1996,  the  Company  agreed to assume the  defense of a lawsuit  with a
former  sales agent of The Neptune  Group,  Inc.  ("Old  Neptune")  and has also
acquired  the rights to a counter  suit  against the same agent.  Old Neptune is
seeking damages against the former sales agent for breach of contract and breach
of fiduciary  duty.  The former sales agent is seeking  commissions  of $753,420
plus statutory interest, punitive damages and attorney's fees. Old Neptune filed
a Motion for Summary  Judgment  requesting,  among other things,  that the Court
enter summary judgment dismissing MKT Inc.'s counterclaims  against Old Neptune.
MKT, Inc. has filed a notice of opposition to Old Neptune's  motions for summary
judgment and cross motion for summary  judgment  whereby MKT, Inc. is requesting
that the court  enter  summary  judgment  dismissing  Old  Neptune's  claims and
defenses.  Neither Old  Neptune's  motion for summary  judgment nor MKT,  Inc.'s
motion  for  summary  judgment  have  been  ruled  upon by the  Court.  Although
management  believes the former  agent's claim to be without  merit,  successful
assertion of the claim could have a materially  adverse  effect on the financial
condition, liquidity and operations of the Company.

The Company has a supply  agreement that called for minimum  software  purchases
from a supplier of $250,000 by  September  30, 1997.  The Company had  purchased
$10,000 of this software as of such date.  The Company has not taken delivery of
the  remaining  $240,000 of this  software.  Certain  disputes  regarding  other
provisions of the agreement exist between the supplier and the Company.

On July 10, 1997,  the Company  entered  into an agreement  with Old Neptune and
Visys  modifying  the  June  28,  1997  Neptune  Purchase  Agreement  and  Visys
Consulting  Agreement,  respectively.  In connection with such  agreements,  the
Company  reduced the exercise  price of warrants to purchase  300,000  shares of
common  stock  previously  granted  to Old  Neptune  to $1.00 from $2.50 and the
exercise price of warrants to purchase 750,000 shares of common stock previously
granted to Old Neptune to $2.00 from  $4.00.  The Company  also  terminated  the
Visys consulting agreement and restructured its payments to Visys in the form of
a promissory note and security  agreement with payments totaling $406,764 over a
42 month period, with a present value of $343,750, discounted at 10 per cent per
annum. A security agreement and collateralized  promissory note for $406,764 was
executed.  The Company is also obligated to pay to Visys 2% of the invoice price
for all Vision and Focus sales or leases made through a four year period  ending
June 30,  2001.  In  accordance  with the  Agreement,  payments of $71,028  were
deferred  through  December 31, 1997. On January 15, 1998, the total of $88,788,
which includes  deferral fees,  became due, and on January 28, 1998, the Company
received a notice of  acceleration  and demand for payment of all amounts due to
Old Neptune, together with additional interest charges at 15 per cent per annum.
Old Neptune has agreed to forbear further  collection efforts until February 28,
1998.


                                       6
<PAGE>


              INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note F -- Income Taxes

No income tax provision was made for either period as losses were incurred.  Net
deferred tax assets were not recorded due to the uncertainty of future earnings.

Note G -- Reclassifications

Certain  amounts,  as  presented in prior  periods,  have been  reclassified  to
conform with the amounts  presented  in the three and six months ended  December
31, 1997. These reclassifications do not have an impact on the net loss that was
previously reported.


                                       7
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation

               INTELLIGENT DECISION SYSTEMS, INC. AND SUBSIDIARIES
                     Management's Discussion and Analysis or
                                Plan of Operation
          For the Three and Six Months Ended December 31, 1997 and 1996
--------------------------------------------------------------------------------

General

In November,  1997, the Company formed an executive management committee for the
purpose of developing  and  implementing  strategies  that would  streamline the
Company's present business, restructure its relationship with HPSI and formalize
a new  strategic  direction  for the  Company's  technology  and  products.  The
following outlines the  accomplishments to date and the present direction of the
Company.

Shift in Strategic Focus

The Company has determined  that it can compete more  effectively in its markets
once it  focuses  on its  core  strengths  and its  technology,  rather  than on
competing head-on with other companies and similar products. Accordingly, rather
than  building  and  maintaining  a large  infrastructure  necessary to install,
maintain  and train  customers,  the  Company is in the  process of  identifying
companies  that have a successful  history of marketing and  supporting  similar
products.  The Company  believes that the sale or license of its products should
produce  increased  profits for the Company with  significantly  less associated
overhead.  This concept of a  technology-driven  company versus a product-driven
company  should enable the Company to develop new products in other market areas
in an effort to maximize the use of the Company's core technology, Screenware.

As part of this shift in focus, the Company has identified the World Wide Web as
the  appropriate  vehicle for the  cost-effective  distribution  of its suite of
health care related  technologies.  In this regard,  efforts are currently under
way to develop strategies for entering the Internet market.

Streamlining of Business

In December,  1997, the Company closed its operations in Grand Rapids,  Michigan
and transferred  all essential  functions to the Company's  Wilton,  Connecticut
office.  In addition,  the number of full-time  employees  company-wide has been
reduced from 33 to 13,  Similarly,  measures have been taken to reduce  overhead
expenses in the  Company's  Draper,  Utah and Wilton  offices.  These steps have
resulted  in savings to the Company of  $180,000  per month or $2.2  million per
year on a going forward basis,  exclusive of interest expense, which exceeds the
Company's previous expectations.

Status of Relationship with HPSI

In the past,  the Company has placed  significant  emphasis on its  relationship
with HPSI, the exclusive  distributor  of the Company's  Vision  product.  While
efforts to structure a satisfactory  merger  transaction with HPSI have not been
successful, the Company continues to pursue various avenues in hopes of creating
a mutually beneficial relationship for the future of both companies. In January,
1998,  the Company  proposed the terms of a marketing  and support  relationship
between  the  companies,  which is  presently  under  review by HPSI.  While the
Company believes that a relationship  between the companies would be beneficial,
no  assurance  can be given  that the  parties  will be able to reach  agreement
regarding the terms of such a relationship.

                                       8
<PAGE>
                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Six Months Ended December 31, 1997 and 1996
-------------------------------------------------------------------------------

Neptune's Contribution

Revenue from Neptune  operations  represented 71% of the Company's total revenue
for the quarter ended December 31,1997.  Neptune's contribution to the Company's
overall revenue is expected to continue until such time as the Company has fully
implemented  its  strategy to market its  products  vis-a-vis  the  Internet and
through partnered marketing organizations.

Strategic Alliances

The Company has  established  contacts  with  several  financial  entities  that
represent potential for strategic alliances and capital sources. The company has
selected two of these entities for further  consideration.  Serious  discussions
have been  on-going  for the past thirty days with one of these  companies  that
could  result  in the  availability  of  significant  capital  resources  and/or
strategic  partnerships.  By the end of the quarter ending  3/31/98,  management
expects  progress that should result in material  improvements  in the company's
financial viability.

Results of Operations

A summary of sales:
<TABLE>
<CAPTION>

(all amounts in thousands)
                                        Three Months Ended          Six Months Ended
                                            December 31,               December 31,
                                       1997             1996          1997       1996 
                                    --------         --------      --------    --------
<S>                                 <C>              <C>           <C>         <C>  

Sales
  Vision                            $    47          $   303       $    72     $   342
  Focus                                 (22)              29           (22)         29
  Other DSI                               8               36           127          64
  Leasing                                80               43           201         191
                                     ------           ------        ------      ------
Total Sales                         $   113          $   411       $   378     $   626
                                     ======           ======        ======      ======
</TABLE>


                                       9
<PAGE>

                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Six Months Ended December 31, 1997 and 1996
-------------------------------------------------------------------------------

Sales for the three and six months ended  December 31, 1997 decreased by 73% and
40%,  respectively,  from the same periods in the previous year. The decline was
due to a sharp decline in Vision sales in the current periods.    
                                                
Selling  expenses  decreased  50% and 22% for the  three  and six  months  ended
December 31, 1997, due to cuts in personnel and  redeployment  of personnel into
administration.

As a result,  administrative  expenses  increased  by 15% for the second  fiscal
quarter  over the same  period in the  prior  year.  For the  first  two  fiscal
quarters, administrative expenses decreased by 3%.

Research and  development  costs  decreased by 81% and 49% for the three and six
months ended December 31, 1997, respectively,  from the same period in the prior
year due to a  significant  adjustment to the number of  programmers  working on
developmental projects, and reductions in programming resources in general.

Interest  expense  increased  over the same period of the  previous  year due to
significant  additional  borrowings  from, and conversion  rights extended to, a
related  party,  and  from  notes  payable  exchanged  in lieu of cash  payments
required  pursuant to the  termination of a consulting  contract with the former
owners of Old Neptune. Due to the Company's default on the Old Neptune note, the
Company accrued additional  interest charges totaling $75,880 in accordance with
the default provisions in the note and related security agreement.  The interest
expense associated with the grant of conversion rights was $177,170.

Liquidity and Capital Resources

During the first six months of fiscal 1998,  the Company used cash of $1,447,140
in its  operations.  The net loss for the six months ended December 31, 1997 was
$2,093,569.  Non-cash  charges to income were  $754,899,  including  $137,450 of
stock  issued to  employees  in lieu of cash  payroll  and  $177,170 of non-cash
interest  charges  related  to a grant of stock  conversion  rights to a related
party lender.  Proceeds  from the sale of leases held for resale were  $248,377.
The Company borrowed an additional $327,448 from a related party in exchange for
collateralized  demand notes payable and the  aforementioned  conversion rights.
The Company also exchanged  collateralized notes payable of $343,750 for accrued
amounts owed  consultants and incurred  deferral and default  provision  charges
that have been added to the original  note  balance,  bringing the amount of the
amounts due on the note to $484,693.

Sources  of cash  included  proceeds  from  the  exercise  of  options  totaling
$112,000. The remainder of the shortfall from operations was made up by reducing
cash reserves by $331,114.

Cash and cash equivalents  were $23,895 at December 31, 1997, which  represented
only a fraction of one month's operating capital,  assuming no increase in sales
over current levels.

                                       10
<PAGE>

                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Six Months Ended December 31, 1997 and 1996
-------------------------------------------------------------------------------

Management's  Plan for  Viability                             

The Company expects its operating  expenses to be $550,000 per quarter,  or $2.2
million  dollars for the next twelve  months.  In order to sustain the  Company,
management plans to:
  
1. Allocate the proper resources needed to support the increased  business being
generated  from  Neptune  Technology  Leasing  Corp.  It is expected  that these
revenues will cover a significant  portion of the Company's  operating budget in
the short term.

2. Redefine the relationship that will be in place between the Company and HPSI.

3. Pursue  product  license   agreements  with  other  health  care  technology
companies.

4. Discussions are currently taking place with investment  partner  prospects to
raise cash in the form of debt and/or equity.

Operating  expenses,  exclusive of interest  expense,  and other  infrastructure
expenses were reduced by a total of $451,000 in the three months ended  December
31, 1997, as compared to the three months immediately prior.

Management  believes  that a  combination  of revenues  and new  financing  will
provide  sufficient  operating capital to sustain operations for the next twelve
months.

Commitments and Contingencies

In June  1996,  the  Company  agreed to assume the  defense of a lawsuit  with a
former sales agent of The Neptune  Group,  Inc. and has also acquired the rights
to a counter suit against the same agent.  The Neptune Group is seeking  damages
against the former  sales agent for breach of contract  and breach of  fiduciary
duty.  The former sales agent is seeking  commissions of $753,420 plus statutory
interest,  punitive  damages and attorney's fees. Old Neptune filed a Motion for
Summary  Judgment whereby it is requesting,  among other things,  that the Court
enter summary judgment dismissing MKT Inc.'s counterclaims  against Old Neptune.
MKT, Inc. has filed a notice of opposition to Old Neptune's  motions for summary
judgment and cross motion for summary  judgment  whereby MKT, Inc. is requesting
that the court  enter  summary  judgment  dismissing  Old  Neptune's  claims and
defenses.  Neither Old  Neptune's  motion for summary  judgment nor MKT,  Inc.'s
motion  for  summary  judgment  have  been  ruled  upon by the  Court.  Although
management  believes the former  agent's claim to be without  merit,  successful
assertion of the claim would have a materially  adverse  effect on the financial
position, liquidity and operations of the Company.

The Company has a supply  agreement that called for minimum  software  purchases
from a supplier of $250,000 by  September  30, 1997.  The Company had  purchased
$10,000 of this  software as of September  30,  1997.  The Company has not taken
delivery of the remaining $240,000 of this software.  Certain disputes regarding
other provisions of the agreement exist between the supplier and the Company.

                                       11
<PAGE>                     

                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Six Months Ended December 31, 1997 and 1996
-------------------------------------------------------------------------------

On July 10, 1997,  the Company  entered  into an agreement  with Old Neptune and
Visys  modifying  the  June  28,  1997  Neptune  Purchase  Agreement  and  Visys
Consulting  Agreement  respectively.  In connection  with such  agreements,  The
Company  reduced the exercise  price of warrants to purchase  300,000  shares of
common  stock  previously  granted  to Old  Neptune  to $1.00 from $2.50 and the
exercise price of warrants to purchase 750,000 shares of common stock previously
granted to Old Neptune to $2.00 from  $4.00.  The Company  also  terminated  the
Visys consulting agreement and restructured its payments to Visys in the form of
a promissory note and security  agreement with payments totaling $406,764 over a
42 month period, with a present value of $343,750, discounted at 10 per cent per
annum. A security agreement and collateralized  promissory note for $406,764 was
executed.  The Company is also obligated to pay to Visys 2% of the invoice price
for all Vision and Focus sales or leases made through a four year period  ending
June 30,  2001.  In  accordance  with the  Agreement,  payments of $71,028  were
deferred  through  December 31, 1997. On January 15, 1998, the total of $88,788,
which includes  deferral fees,  became due, and on January 28, 1998, the Company
received a notice of  acceleration  and demand for payment of all amounts due to
Old Neptune, together with additional interest charges at 15 per cent per annum.
Old Neptune has agreed to forbear further  collection efforts until February 28,
1998.

Approximately  50% of DSI's  leased  premises in Draper,  Utah was  subleased to
another party in January, 1998.

New Board and Management

On October 30, 1997,  James  Keller and Mark Babin  resigned as directors of the
Company,  leaving three  positions  held and four open. On November 3, 1997, the
remaining directors appointed an interim management  committeeto run the Company
which included David Horowitz,  Robert Hyte,  Eugene Feher,  Ron Greenberg,  Jon
Preiser,  Scott  Preiser and Jerry Beck.  Mark Babin  resigned as CFO of IDSI on
November 3, 1997.Roger Fowler, controller of IDSI's subsidiary DSI, was named as
interim CFO, and was  terminated on January 9, 1998.  Jerry Beck was  terminated
January 2, 1998. An active search is taking place for a Chief Financial Officer.

David  Horowitz  remains as CEO and President  and was  appointed  Treasurer and
Acting Chief Financial Officer. Robert Hyte was appointed as Secretary.


              DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-QSB,  including all documents  incorporated by reference,  includes
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements of
historical facts included in this Form 10-QSB (and in documents  incorporated by
reference),   including  without  limitation,   statements  under  "Management's
Discussion and Analysis or Plan of Operation"  regarding the Company's financial
position,  business  strategy  and plans and  objectives  of  management  of the
Company for future  operations,  are  forward-looking  statements.  Although the
Company  believes  that  the  expectations  reflected  in  such  forward-looking
statements are reasonable,  it can give no assurance that such expectations will
prove to have been  correct.  All  subsequent  written and oral  forward-looking
statements  attributable  to the  Company  or  persons  acting on its behalf are
expressly qualified in their entirety by this section.






                                       12
<PAGE>

                         PART II - OTHER INFORMATION

Item 1.     Legal Proceedings:

               As  reported  in the  Company's  Form  10-KSB for the fiscal year
               ended June 30, 1997, The Neptune Group,  Inc. ("Old  Neptune") is
               involved in litigation  with  MKT, Inc.  MKT,  Inc. has  filed  a
               notice  of  opposition  to  Old  Neptune's  motions  for  summary
               judgment and cross motion for summary judgment whereby MKT,  Inc.
               is  requesting that the court  enter summary judgment  dismissing
               Old Neptune's claims and defenses.  Neither Old Neptune's  motion
               for summary judgment nor MKT, Inc.'s motion for summary  judgment
               have been ruled upon by the Court.

               No other reportable events have   occurred  which  would  require
               identification  of the  discussion  under Legal  Proceedings  set
               forth  in the Company's Form 10-KSB Annual  Report for the fiscal
               year ended June 30, 1997. 

Item 2.     Changes in Securities:

               None.

Item 3.     Defaults by the Company upon its 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.
                   
                    EX-27         Financial Data Schedule    

                B) Reports on Form 8-K filed during  the quarter ended  December
                   31, 1997.

                         None


                                      13

<PAGE>







                                  SIGNATURES



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







                                        INTELLIGENT DECISION SYSTEMS, INC.



Date: February 17, 1998                  /s/ 
                                         --------------------------
                                         David A. Horowitz
                                         President





Date: February 17, 1998                /s/                                
                                         --------------------------           
                                         David A. Horowitz
                                         Acting Chief Financial Officer








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