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 March 31, 1998

               [ ] 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.)



                                 Not Applicable
       (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:   May 15, 1998: 22,718,047

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
                  March 31, 1998 and June 30, 1997                    1

             Condensed Consolidated Statements of Operations
               for the  three and nine months ended March 31,
               1998 and March 31, 1997                                3

             Condensed Consolidated Statements of Cash Flows
               for the nine months ended  March
               31, 1998 and March 31, 1997                            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                                      12
      Item 2.  Changes in Securities                                  12
      Item 3.  Defaults Upon Senior Securities                        12
      Item 4.  Submission of Matters to a Vote of Security Holders    12
      Item 5.  Other Information                                      12
      Item 6.  Exhibits and Reports on Form 8-K                       12

      Signatures                                                      13




<PAGE>



Part I. - Financial Information

Item 1.  Financial Statements


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

                                     ASSETS

                                                 Mar. 31,            June 30,
                                                   1998                1997
                                               ------------        ------------
                                               (unaudited)

CURRENT ASSETS
     Cash and cash equivalents                $     38,896         $   355,009
     Accounts receivable
       Trade, net of allowance for doubtful
         accounts of $16,598 and $16,587,
         respectively                               25,312             123,795
     Net investment in direct
       finance leases, current portion              77,096             342,205
     Inventories                                         0              53,534
     Contractual rights                            292,442             420,282
     Prepaid expenses                               98,178              36,740
                                                 ---------           ---------
TOTAL CURRENT ASSETS                               531,924           1,331,565

PROPERTY AND EQUIPMENT, NET                        247,512             392,412

OTHER ASSETS
     Contractual rights                             17,544              24,604
     Net investment in direct finance
       leases, net of current portion              134,491             199,914
     Intellectual property - net of
      amortization                               1,101,191           1,369,048
     Other - net of amortization                   144,053             157,033
                                                 ---------           ---------
TOTAL ASSETS                                   $ 2,176,715          $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

                                                 Mar. 31,            June 30,
                                                   1998                1997
                                               -----------        ------------
                                               (unaudited)
CURRENT LIABILITIES
     Notes payable                             $   375,234         $         0
     Related party notes payable                   438,621              30,553
     Accounts payable                            1,170,623             890,388
     Accrued expenses                              414,086             702,702
     Long term obligations, current                 90,733             121,355
                                                ----------          ----------

     TOTAL CURRENT LIABILITIES                   2,489,297           1,744,998

LONG-TERM OBLIGATIONS, net of current portion      171,111             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;
       20,743,675 and 14,548,196
       shares issued and outstanding                20,744              14,548
     Additional paid in capital - common        13,813,857          13,076,276
     Accumulated deficit                       (14,318,294)        (11,694,584)
                                                ----------          ----------
TOTAL STOCKHOLDERS' EQUITY                        (483,693)          1,396,240
                                                ----------          ----------

                                               $ 2,176,715         $ 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           Nine Months Ended
                                          Mar. 31,                      Mar. 31,
                                   ------------------------     ------------------------
                                      1998           1997          1998           1997
                                  ---------      ---------      ---------      ---------
<S>                             <C>            <C>            <C>           <C>

Revenues                        $   168,313    $   142,786    $   546,453   $    753,818

Costs of Goods and Services          97,091        341,793        512,265      1,120,547
                                  ---------      ---------      ---------      ---------
Gross Profit (Loss)                  71,222       (199,007)        34,188       (366,729)

Expenses
  Selling                            38,213        255,848        501,806        833,325
  Administration                    309,327        433,535      1,057,792      1,202,458
  Research & development             69,527        202,043        284,105        625,801
  Depreciation & amortization       144,602        146,068        441,437        437,060
  Interest expense                   56,816          6,928        369,166         17,778
                                  ---------      ---------      ---------      ---------
                                    618,485      1,044,422      2,654,305      3,116,422

Net loss from operations           (547,263)    (1,243,429)    (2,620,117)    (3,483,151)

Other income (expense)               14,122         16,482         (3,593)        69,392

                                  ---------      ---------      ---------      ---------
Net loss                        $  (533,141)   $(1,226,947)   $(2,623,710)   $(3,413,759)
                                  =========      =========      =========      =========

Net loss per share                   $(0.03)        $(0.08)        $(0.16)        $(0.25)
                                       ====           ====           ====           ====
Weighted average
 shares outstanding              19,159,096     14,485,787     16,503,064     13,894,984
                                 ==========     ==========     ==========     ==========
</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)
--------------------------------------------------------------------------------

                                        Nine Months Ended
                                            Mar. 31,
                                   ------------------------
                                      1998           1997
                                   ---------      ---------

Net cash flows from
     operating activities        $(2,100,075)   $(3,574,670)

Net cash flows from
     investing activities            449,732       (158,545)

Net cash flows from
     financing activities          1,334,230        952,792
                                   ---------      ---------
Net change in
     cash and equivalents           (316,113)    (2,780,423)
Beginning cash and equivalents       355,009      3,064,329
                                   ---------      ---------
  Ending cash
     and equivalents             $    38,896      $ 283,906
                                   =========      =========









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 nine month periods ended March 31, 1998 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 nine months ended March 31, 1998 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           5,995,479     5,996      388,223                       394,219

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                                                      (2,623,710)    (2,623,710)
                        ----------    ------   ----------     ----------     ----------
Balance, Mar. 31,
  1998                  20,743,675   $20,744  $13,813,857   $(14,318,294)   $  (483,693)
                        ==========    ======   ==========     ==========     ==========
</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 nine months ended March 31, 1998, Mid America  Venture  Capital Fund,
Inc. ("Mid America"),  loaned the Company $408,068 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. The Company recorded
a charge to interest expense of $177,170, as a result of the grant.

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.

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 counter claims against Old Neptune.
MKT, Inc.  filed a notice of  opposition  to Old  Neptune's  motions for summary
judgment and cross motion for summary judgment whereby MKT, Inc.  requested that
the court enter summary  judgment  dismissing Old Neptune's claims and defenses.
The Old Neptune's motion for summary judgment and MKT, Inc.'s motion for summary
judgment has been denied by the appointed  Magistrate  of the Court.  No further
action has taken place to date.  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, a 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  agreed to forbear  further  collection  efforts until  February 28,
1998. No action has been taken by either party since 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 nine months ended March 31,
1998.  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 Nine Months Ended March 31, 1998 and 1997
--------------------------------------------------------------------------------

General

On February 4, 1998, at the conclusion of its mandated  90-day term, the interim
Executive  Management  Committee made its final  recommendation to the Company's
Board of Directors.  The committee was formed for the purpose of developing  and
implementing  strategies that would streamline the Company's  present  business,
restructure its relationship with National Purchasing Corporation,  a California
corporation doing business as HPSI, and formalize a new strategic  direction for
the Company's  technology and products.  The following  outlines the committee's
recommendations and the current direction of the Company.

Streamlining of business

The Company has taken  measures to  streamline  its  business as a result of the
lack of revenue from the sale of the Company's Vision product. Poor sales of the
Vision   product  are  primarily   attributable   to  the  Company's   exclusive
distribution  agreement  with  HPSI and the lack of  performance.  Further,  the
Company's subsidiary, Digital Sciences, Inc. ("DSI"), has downsized in personnel
and moved to new office facilities in Utah, resulting in a significant reduction
in operational costs.

In addition,  the Company has accepted the  resignations of the former employees
of Neptune Technology Leasing Corp. ("Neptune") and has entered into a Letter of
Intent with these former employees to purchase certain of the assets of Neptune.
The poor financial  performance  of the Company  contributed to the inability of
Neptune to obtain access to sufficient  capital,  including bank lines,  to fund
its operations and growth plans.  The Neptune  agreement,  when finalized,  will
release IDSI from substantial  contractual liabilities and further contribute to
reductions in IDSI operating expenses on a going forward basis.

Implement strategic shift in Company's marketing and product strategy

The Company has identified the World Wide Web as the appropriate vehicle for the
distribution  of its suite of health care and other  related  products.  In this
regard,  efforts are currently under way to develop  strategies for entering the
Internet market.

IDSI has re-directed its development resources towards an Internet based product
portfolio.  The Company has reduced and  reallocated  its operating  expenses to
allow  the  current  personnel  to  focus  on  the  development  and  commercial
exploitation  of Internet  based  products and  services.  Discussions  are also
underway with several entities that have value-added  products and services that
could  position  IDSI  technology  in a favorable  position  within the Internet
commerce  industry.  However,  no assurance can be made that the Company will be
able to  successfully  develop  Internet  based  products or otherwise  generate
profits from such operations.

Strategic Alliances

The Company has  established  contacts  with  several  entities  that  represent
potential  for  strategic  alliances  and/or  for the sale or  licensing  of its
current products and technology. Preliminary discussions have been on-going with
one  of  these  companies  that  the  Company   believes  could  result  in  the
availability of capital resources and/or strategic partnerships.


Results of Operations

A summary of sales:
<TABLE>
<CAPTION>
(all amounts in thousands)
                                        Three Months Ended          Nine Months Ended
                                             March 31,                   March 31,
                                       1998             1997          1998       1997
                                    --------         --------      --------    --------
<S>                                 <C>              <C>           <C>         <C>

Sales
  Vision                            $     0           $   92       $    72     $   434
  Focus                                   0                0           (22)         29
  Other DSI                              39               (9)          166          55
  Leasing                               129               45           330         236
                                     ------           ------        ------      ------
Total Sales                         $   168          $   128       $   546     $   754
                                     ======           ======        ======      ======
</TABLE>

                                       8
<PAGE>



                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Nine Months Ended March 31, 1998 and 1997
-------------------------------------------------------------------------------

Sales for the three and nine months  ended March 31, 1998  increased  by 31% and
decreased by 27%,  respectively,  from the same  periods in the previous  fiscal
year.  The  increase in sales for the three  months  ended March 31,  1998,  was
primarily  attributable  to an increase in the sales from the Company's  leasing
operations.  The decline in sales for the nine months ended March 31, 1998,  was
primarily  attributable  to a sharp  decline  in  Vision  sales  in the  current
periods,  which  decline was  partially  offset by an increase in the  Company's
leasing operations.

Selling expenses decreased 85% and 40% for the three and nine months ended March
31, 1998,  respectively,  due to cuts in personnel and redeployment of personnel
into administration.

Administrative  expenses  decreased by 29% for the third fiscal quarter over the
same  period in the prior  fiscal  year.  For the first three  fiscal  quarters,
administrative expenses decreased by 12%.

Research and  development  costs decreased by 66% and 55% for the three and nine
months  ended March 31,  1998,  respectively,  from the same period in the prior
fiscal year due to a significant adjustment to the number of programmers working
on developmental projects, and reductions in programming resources in general.


Liquidity and Capital Resources

During the first nine months of fiscal 1998, the Company used cash of $2,100,670
in its  operations.  The net loss for the nine  months  ended March 31, 1998 was
$2,623,710.  Non-cash charges to income were $1,012,826,  including  $394,219 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 $408,068 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.


Cash and cash equivalents were $38,896 at March 31, 1998, which represented only
a fraction of one month's operating capital,  assuming no increase in sales over
current levels.

                                       9
<PAGE>



                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Nine Months Ended March 31, 1998 and 1997
-------------------------------------------------------------------------------

Management's  Plan for  Viability

The Company expects its operating  expenses to be $300,000 per quarter,  or $1.2
million  dollars,  for the next twelve  months.  In order to fund the  Company's
future operations, the Company intends to implement the following strategies:

1. Finalize current  negotiations  for capital  formation that will support IDSI
and its technology development as it enters the electronic commerce industry and
the Internet.

2. Retain only the necessary personnel required to support current DSI customers
and move the Internet based product and services portfolio forward.

3. Complete the asset sale of Neptune Technology Leasing Corp. by May 31, 1998.

4.  Implement a joint venture  strategy to move quickly into the Internet  based
products and services.

5.  Implement its plan to resolve the issues between IDSI and HPSI regarding the
exclusive distribution rights of Vision and associated products.

6. Continue  discussions  with potential  distribution  partners for DSI's FOCUS
software product for physician's offices.  Companies targeted currently have the
infrastructure  necessary to support this client base,  but lack the  integrated
benefits of the FOCUS software product.

No assurances can be given that the Company will be able to implement any of the
above strategies. The failure to implement some or all of these strategies could
have a material adverse effect on the Company's  business,  financial  condition
and  results of  operations.  Management  believes  that new  financing  will be
necessary to 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.  ("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 counter claims against Old Neptune.
MKT, Inc.  filed a notice of  opposition  to Old  Neptune's  motions for summary
judgment and cross motion for summary judgment whereby MKT, Inc.  requested that
the court enter summary  judgment  dismissing Old Neptune's claims and defenses.
The Old Neptune's motion for summary judgment and MKT, Inc.'s motion for summary
judgment has been denied by the appointed  Magistrate  of the Court.  No further
action has taken place to date.  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 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.

                                       10
<PAGE>

                       Intelligent Decision Systems, Inc.
                     Management's Discussion and Analysis or
                              Plan of Operation
              For the Nine Months Ended March 31, 1998 and 1997
-------------------------------------------------------------------------------

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. No action has been taken by either party since February 28,1998.


Conclusion

The Company's  cash flows from  operations  and its available  capital have been
insufficient to meet its current operating expenses.  Operating expenses for the
nine  months  ended  March  31,  1998,  have  been  funded  primarily  through a
combination of cash flows from  operations,  specifically  revenues derived from
the  Company's  leasing  operation,  and the  issuance  of Common  Stock for the
payment of salaries.  Further,  upon the consummation of the Company's  proposed
sale of Neptune,  the Company will be left without the revenue  contribution  of
Neptune's leasing  operations.  In the absence of obtaining  additional  capital
through the sale and/or  licensing of the Company's  Vision and Focus  products,
the successful,  timely and profitable implementation of Internet-based products
and services, the refinancing of existing indebtedness,  asset sales, securing a
credit facility,  consensual  restructuring of existing debt and agreement terms
and/or  similar  measures,  the Company will be unable to fund its operations or
repay its indebtedness to Mid-American or Visys. Should the Company default with
respect  to the  repayment  of  existing  indebtedness,  certain  lenders  could
foreclose on Company  assets  securing their  indebtedness,  which would include
substantially all of the Company's assets. Accordingly,  the Company's financial
condition  could  require that the Company  seek the  protection  of  applicable
reorganization  laws in order to avoid or delay  actions by it  creditors  which
would  materially  adversely  affect or cause  the  cessation  of the  Company's
operations.


              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.




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<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,  Old Neptune is involved in litigation  with
               MKT, Inc. MKT, Inc. filed a notice of opposition to Old Neptune's
               motions  for  summary  judgment  and  cross  motion  for  summary
               judgment whereby MKT, Inc. requested that the court enter summary
               judgment  dismissing  Old  Neptune's  claims  and  defenses.  Old
               Neptune's motion for summary  judgment and MKT, Inc.'s motion for
               summary judgment have  been ruled upon and denied by a Magistrate
               of the Court.  No further action has been taken as of this date.

               Care Inn  Properties,  Inc.  ETAL.,  filed a suit against Digital
               Sciences,  Inc., DSI Financial  Corp., Neptune Technology Leasing
               Corp.,  HPSI,  Inc.,  Sterling  National Bank and Trust and Brian
               Horner. The suit No. 98-CI-02421 was filed in the District Court,
               166 Judicial  District,  Bexar  County,  Texas on the 17th day of
               February, 1998.  The suit alleges  breach of contract,  breach of
               warranty,   fraudulent   inducement,   request  for   declaratory
               judgment,  punitive  damages  and  attorney's  fees.  The Company
               intends to vigorously defend this matter. Successful assertion of
               the  claims  could  have  a  materially  adverse  effect  on  the
               business,  financial  condition,  liquidity and operations of the
               Company.

               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  March 31
                   1998.

                         None


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<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: May 19, 1998                  /s/      David A. Horowitz
                                         --------------------------
                                         David A. Horowitz
                                         President





Date: May 19, 1998                 /s/       David A. Horowitz
                                         --------------------------
                                         David A. Horowitz
                                         Acting Chief Financial Officer








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