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

                                  FORM 10-QSB

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

                    For quarterly period ended March 31, 1997

            [ ] 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.: 33-42904

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

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


            Weyhill Building, Suite 400, 2025 East Beltline Ave., SE,
                          Grand Rapids, Michigan 49546
                    (Address of Principal Executive Offices)

                                  616-285-5830
                            (Issuer's Telephone No.)

                                  No Changes
(Former name former address 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 of 1934  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 14, 1997: 14,580,231

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, 1997 and June 30, 1996                       1

             Condensed Consolidated Statements of Operations
               for the  three months ended  March 31, 1997
               and March 31, 1996                                     2

             Condensed Consolidated Statements of Operations
               for the  nine months ended  March 31, 1997
               and March 31, 1996 and cumulative amounts
               since inception                                        3

             Condensed Consolidated Statements of Cash Flows
               for the  nine months ended  March 31, 1997
               and March 31, 1996 and cumulative amounts
               since inception                                        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                                      14
      Item 2.  Changes in Securities                                  14
      Item 3.  Defaults Upon Senior Securities                        14
      Item 4.  Submission of Matters to a Vote of Security Holders    14
      Item 5.  Other Information                                      14
      Item 6.  Exhibits and Reports on Form 8-K                       14

      Signatures                                                      15






<PAGE>

               Intelligent Decision Systems, Inc. and Subsidiaries
                          (a development stage company)
                      Condensed Consolidated Balance Sheets

                                               March 31,           June 30,
                                                 1997                1996
                                             ------------        ------------
                                             (unaudited)
             Assets
Current Assets
  Cash                                       $  283,906            $3,064,329
  Accounts receivable (net)                     137,256                53,253
  Net investment in leases                      457,662               143,394
  Inventories                                   138,440               146,940
  Contractual rights                            204,166               251,250
  Prepaid expenses                               92,301                16,766
                                              ---------             ---------
     Total current assets                     1,313,731             3,675,932

Property and equipment                          429,965               399,584

Other Assets
  Contractual rights                             47,451               194,445
  Net investment in leases                      135,303               105,590
  Intellectual property                       1,458,333             1,726,191
  Other                                         160,274               158,736
                                              ---------             ---------
                                             $3,545,057            $6,260,478
                                              =========             =========

    Liabilities & Stockholders' Equity

Current Liabilities
  Bank overdraft                           $          0           $    81,044
  Current portion of long term debt              48,130                44,534
  Notes payable                                       0                 9,000
  Accounts payable                              532,060               470,946
  Accrued expenses                              340,509               575,033
                                              ---------             ---------
    Total current liabilities                   920,699             1,180,557

Long term debt                                  217,989               136,758

Commitments and contingencies                                                

Stockholders' Equity
  Preferred                                           0                     2
  Common                                         14,497                12,323
  Additional paid in capital                 13,318,112            12,443,319
  Deficit accumulated during the
     development stage                      (10,926,240)           (7,512,481)
                                             ----------            ----------
       Total stockholders' equity             2,406,369             4,943,163
                                             ----------            ----------

                                            $ 3,545,057           $ 6,260,478
                                             ==========            ==========



See accompanying notes to condensed consolidated financial statements.


                                       1
<PAGE>


               Intelligent Decision Systems, Inc. and Subsidiaries
                          (a development stage company)
           Condensed Consolidated Statements of Operations (unaudited)

                                              Three Months Ended
                                                   March 31,
                                          ------------------------
                                             1997           1996
                                          ---------      ---------

Revenues                                $  142,786     $  188,814

Costs of Goods and Services                341,793        199,900
                                         ---------      ---------
Gross Profit (Loss)                       (199,007)       (11,086)

Expenses
  Selling                                  255,848         95,288
  Administration                           433,535        835,018
  Research & development                   202,043        281,365
  Depreciation & amortization              146,068         60,516
  Interest expense                           6,928         71,265
                                         ---------      ---------
                                         1,044,422      1,343,452

Net loss from operations                (1,243,429)    (1,354,538)

Other income                                16,482         17,288

                                         ---------      ---------
Net loss                               $(1,226,947)   $(1,337,250)
                                         =========      =========

Net loss per share                        $(0.08)        $(0.16)
                                            ====           ====
Weighted average shares outstanding     14,485,787      8,409,875
                                        ==========      =========



See accompanying notes to condensed consolidated financial statements.

                                       2
 <PAGE>


               Intelligent Decision Systems, Inc. and Subsidiaries
                          (a development stage company)
           Condensed Consolidated Statements of Operations (unaudited)

                                       Nine Months Ended         Cumulative
                                          March 31,                Amounts
                                   ------------------------         Since
                                      1997           1996         Inception
                                   ---------      ---------     ------------

Revenues                        $   753,818    $   353,977     $  1,818,603

Costs of Goods and Services       1,120,547        549,702        1,668,992
                                  ---------      ---------        ---------
Gross Profit (Loss)                (366,729)      (195,725)         149,611

Expenses
  Selling                           833,325        399,154        1,328,528
  Administration                  1,202,458      1,168,499        4,159,211
  Research & development            625,801        767,564        4,620,789
  Depreciation & amortization       437,060        184,618          926,784
  Interest expense                   17,778        184,897          351,713
                                  ---------      ---------        ---------
                                  3,116,422      2,704,732       11,387,025

Net loss from operations         (3,483,151)    (2,900,457)     (11,237,414)

Other income (expense)               69,392       (348,354)         320,474

                                  ---------      ---------        ---------
Net loss                        $(3,413,759)   $(3,248,811)    $(10,916,940)
                                  =========      =========        =========

Net loss per share                 $(0.25)        $(0.42)
                                     ====           ====
Weighted average
 shares outstanding              13,894,984      7,679,716
                                 ==========      =========



See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

               Intelligent Decision Systems, Inc. and Subsidiaries
                          (a development stage company)
           Condensed Consolidated Statements of Cash Flows (unaudited)

                                       Nine Months Ended         Cumulative
                                          March 31,               Amounts
                                   ------------------------         Since
                                      1997           1996         Inception
                                   ---------      ---------     ------------

Net cash flows from
     operating activities        $(3,574,670)   $(2,162,633)    $(8,217,858)

Net cash flows from
     investing activities           (158,545)       522,105        (664,729)

Net cash flows from
     financing activities            952,792      1,509,982       9,166,493
                                   ---------      ---------      ----------
Net change in
     cash and equivalents         (2,780,423)      (130,546)        283,906
Beginning cash and equivalents     3,064,329        620,992               0
                                   ---------      ---------      ----------
  Ending cash
     amd equivalents             $   283,906    $   490,446     $   283,906
                                   =========      =========      ==========










See accompanying notes to condensed consolidated financial statements.


                                       4

<PAGE>


                       INTELLIGENT DECISION SYSTEMS, INC.
                          (A Development Stage Company)
        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, 1997 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending June 30, 1997. 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, 1996. The
year end condensed consolidated balance sheet was derived from audited financial
statements,   but  does  not  include  all  disclosures  by  generally  accepted
accounting principles.

Note B -- Accounts Receivable

Trade  accounts  receivable as of March 31, 1997 and as of June 30, 1996 are net
of allowances for doubtful accounts of $0 and $8,000, respectively.

Note C -- Stockholders' Equity

Changes in stockholders' equity for the nine months ended March 31, 1997 are:

<TABLE>
<CAPTION>


                              Common        Preferred                  Accumulated
                              Shares         Shares        Amount        Deficit            Total
                            ----------     ---------     -----------  --------------   --------------
<S>                         <C>             <C>          <C>            <C>                <C>

Balance at June 30, 1996    12,323,332       1,631       $12,455,644    $(7,512,481)       $4,943,163

Conversion of warrants         776,600                       656,350                          656,350

Conversion of options           33,333                        41,666                           41,666

Issued for services              4,000                         7,313                            7,313

Conversion of
  preferred stock            1,359,633      (1,631)

Options issued for
  services                                                   185,816                          185,816

Post-closing purchase
  price adjustments                                          (14,180)                         (14,180)

Loss from operations                                                     (3,413,759)       (3,413,759)
                            ----------        -----       ----------      ---------         ---------
Balance at March 31, 1997   14,496,898            0      $13,332,609   $(10,926,240)       $2,406,369
                            ==========        =====       ==========      =========         =========
</TABLE>


                                     5
<PAGE>
                       INTELLIGENT DECISION SYSTEMS, INC.
                          (A Development Stage Company)
        Notes to Condensed Consolidated Financial Statements (Unaudited)
     --------------------------------------------------------------------

Note C -- Stockholders' Equity (continued)

                                           March 31,          June 30,
                                             1997               1996
                                          ------------     ------------

Series A Preferred Stock
  Par value                                     $.001            $.001
  Carrying value per share                     $1,000           $1,000
  Shares originally authorized              1,000,000        1,000,000
  Shares cancelled                              1,631                0
  Remaining authorized shares                 998,369        1,000,000
  Shares issued and outstanding                     0            1,631

Common Stock
  Par value                                     $.001            $.001
  Shares authorized                        30,000,000       30,000,000
  Shares issued and outstanding            14,496,898       12,323,332

Note D -- 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 E -- Related Party Transactions

On November  14,  1996,  the  Company  advanced  $30,000 to Mid America  Venture
Capital Fund,  Inc., an affiliate by reason of beneficial  stock  ownership.  On
December 30, 1996, David Horowitz, Chairman and Director of the Company and also
Chief  Executive  Officer  of  DSI,  exchanged  approximately  8  months  of his
employment  contract  with DSI for cash of  $56,250  which was  returned  to the
Company when Mr. Horowitz exercised options for 112,500 shares at $.50 per share
on December  31,  1996.  On December  30,  1996,  Robert Hyte, a Director of the
Company  and  also  Chairman  and  Chief  Operating  Officer  of DSI,  exchanged
approximately  9 months of his employment  contract with DSI for cash of $64,000
which was  returned to the Company when Mr. Hyte  exercised  options for 128,000
shares at $.50 per share on December 31, 1996. The Company  retained the related
stock  certificates  issued from the exercise of the options as security for the
future performance of the contracted services.

Subsequent to March 31, 1997,  the Board of Directors of the Company  authorized
the exchange of cash collateral for the stock certificates held as security.  On
April 1, 1997,  Robert Hyte provided  $50,000 as cash collateral to the Company,
and, in exchange,  the Company released 100,000 of the 128,000 shares which were
previously held as security.

Note F -- Commitments and Contingencies

On June 28, 1996,  the Company  acquired  certain  assets of The Neptune  Group,
Inc.,  a leasing  company.  In  connection  with this  acquisition,  the Company
assumed certain  liabilities of The Neptune Group,  Inc.  including that certain
lawsuit entitled The Neptune Group, Inc. vs. MKT, Inc. (Case No. 3 94CV-587 AWT)
filed in the United States  District  Court for the District of  Connecticut  on
April 8, 1994.  This case  involves  claims by The  Neptune  Group,  Inc.  for a
declaratory  judgment and damages for breach of contract and a  counterclaim  by
MKT,  Inc.  claiming  that  certain  commissions  were  unpaid in the  amount of
$753,419.50  plus interest.  Without further  discovery from MKT, Inc. and third
parties,  the  Company  has no basis to  estimate  the  possible  damages on The
Neptune  Group,  Inc.'s  claims  or the  outcome  with  respect  to MKT,  Inc.'s
counterclaims.  Management  does  not  believe  that  this  legal  action,  when
ultimately  concluded and determined,  will have a material  adverse effect upon
IDSI's financial condition, results of operations or liquidity.

                                       6
<PAGE>

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

Note G -- 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 H -- SFAS No. 128 "Earnings Per Share"

In February,  1997, the Financial Accounting Standards Board issued Statement of
Accounting  Standards No. 128, "Earnings Per Share".  This Statement  simplifies
the standards for computing  earnings per share,  replacing the  presentation of
primary earnings per share with a presentation of basic earnings per share. SFAS
No. 128 also requires dual  presentation of basic and diluted earnings per share
on the face of the  income  statement  for all  entities  with  complex  capital
structures. Basic earnings per share is computed by dividing income available to
common stockholders by the weighted-average  number of common shares outstanding
for the  period.  Diluted  earnings  per share is  computed  similarly  to fully
diluted  earnings per share pursuant to APB Opinion No. 15,  Earnings Per Share,
which is superseded by this statement. This Statement is effective for financial
statements  issued for  periods  ending  after  December  15,  1997,  with early
application  prohibited.  The Company has not yet  determined the impact of this
Statement on the consolidated financial statements.

Note I -- 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,
1997. These reclassifications do not have an impact on net loss, as previously
reported.


                                       7
<PAGE>

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


Results of Operations


Operations for the nine months ended March 31, 1997 included further development
of the Vision(TM)(hereafter "Vision") and Focus(TM) (hereafter "Focus"), related
leasing activities and increased levels of selling effort,  particularly for the
Focus system,  which is marketed to  physicians  and  physician  groups.  Orders
received  subsequent to March 31, 1997,  exceeding  $500,000,  are primarily for
Focus  systems,  specifically  from group  ophthalmology  practices  and medical
management groups.

Net revenues for the third fiscal quarter were as follows:



                                       Three Months Ended March 31,   % incr.
                                            1997          1996        (decr.)
                                          --------      -------      --------
         Computer systems                $  99,350    $ 188,814        (47.4)
         Leasing                            43,436         --           n/a
                                          --------      -------
                                         $ 142,786    $ 188,814        (24.4)
                                          ========      =======

Computer system revenues decreased $89,464 as Vision system unit sales decreased
to 2 units  from 6 units from the same  period of the prior  year.  The  Company
purchased  the  operations of The Neptune  Group,  Inc. on June 28, 1996 and, as
revenues are recorded  from that date only,  there were no leasing  revenues for
the Company in the first nine months of fiscal  1996.  Vision  system sales were
less than management's expectations for the quarter.

Net revenues for the nine months ended March 31, 1997 were as follows:

                                       Nine Months Ended March 31,   % incr.
                                            1997          1996        (decr.)
                                          --------      -------      --------
         Computer systems                $ 517,621    $ 353,977         46.2
         Leasing                           236,197         --           n/a
                                          --------      -------
                                         $ 753,818    $ 353,977        113.0
                                          ========      =======

Computer  system  revenues  increased  $163,644  as  Vision  system  unit  sales
increased to 15 units from 8 units in same period of the prior year.

The total of Vision  system  installations  at March 31, 1997 was 33 units.  The
total of Focus systems  installed  was 7 as of the same date.  Total backlog for
all systems was 2 at March 31, 1997.  In general,  sales of Vision  systems have
fallen short of  management's  expectations  due to delays in the  completion of
product  enhancements which were completed in December,  1996. Vision sales were
less for the quarter ended March 31, 1997 than those  predicted by the Company's
marketing and selling agent.  The Company was not involved in leasing during the
previous fiscal year.

                                       8

<PAGE>

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

Costs of goods and services sold were as follows:



                                      Three Months Ended March 31,     % incr.
                                            1997         1996         (decr.)
                                          --------      -------      --------
         Computer systems                $ 219,296    $ 199,900         9.7
         Leasing                           122,745        --           n/a
                                          --------      -------
                                         $ 341,973    $ 199,900        71.0
                                          ========      =======

Personnel costs for computer  systems'  customer  service and technical  support
increased  by $111,911  over the same period in the previous  year  reflecting a
buildup in  anticipation  of  expected  sales of Vision,  which did not occur as
rapidly as  expected.  This  increase  was offset by a decrease in hardware  and
purchased software components due to lower unit sales than in the same period of
the previous year.

Leasing costs are primarily personnel costs.

                                        Nine Months Ended March 31,   % incr.
                                            1997         1996         (decr.)
                                          --------      -------      --------
         Computer systems               $  752,095    $ 549,702        36.8
         Leasing                           368,452        --           n/a
                                          --------      -------
                                        $1,120,547    $ 549,702       103.8
                                          ========      =======

Personnel costs for computer systems' technical support and computer integration
increased  to  $478,492  for the nine months  ended  March 31, 1997  compared to
$295,039  from the same period in the prior year due primarily to an increase in
the number of customer service and technical support employees. The remainder of
costs were  directly  related to  increases  in sales of systems,  hardware  and
miscellaneous software.

Leasing costs consist primarily of personnel costs. Leasing costs increased with
the commencement of leasing activities in July, 1996.


                                       9
<PAGE>


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

Operating expenses were:

                                       Three Months Ended March 31,   % incr.
                                            1997         1996         (decr.)
                                          --------      -------      --------
         Selling                       $   255,848  $    95,288        168.5
         Administration                    433,535      835,018        (48.1)
         Research & development            202,043      281,365        (28.2)
         Depreciation & amortization       146,068       60,516         41.4
         Interest expense                    6,928       71,265        (90.3)
                                          --------      -------
                                       $ 1,044,422  $ 1,343,452        (22.3)
                                          ========      =======


Selling expenses increased by $160,560 for the three months ended March 31, 1997
over the same  period of the prior year due to the  addition  of a direct  sales
force for the Focus system.

Administration  expenses  decreased by $401,483 due to a decrease of $644,982 in
expenses   related  to   consulting   contracts,   offset  by  an   increase  in
administrative expenses for Neptune Technology Leasing Corp., which was acquired
in June, 1996.

Research and  development  costs were lower than the same period in the previous
year  as  personnel  were  redeployed  to  technical  support   activities  from
developmental programming.

Depreciation  and  amortization  increased due to  amortization  associated with
"Screenware",  a proprietary  computer program  application  generating language
that was purchased from Resource Finance Group, Ltd. on April 1, 1996.

Interest  expense  decreased due to the  retirement of private  placement  debt,
which  occurred  during June of 1996.  The remaining  interest  expense  relates
primarily to equipment purchased via capital leases.

Other  expense  for the three  months  ended  March  31,  1997 and 1996 were not
material in amount.

Total  employment was 45 at March 31, 1997 an increase from 2 at March 31, 1996.
For the three months ended March 31, 1996, the Company purchased its programming
resources  and  administrative  services  from  outside  contractors,  including
Resource Finance Group, Ltd.

                                        10
<PAGE>

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

                                        Nine Months Ended March 31,   % incr.
                                            1996         1995         (decr.)
                                          --------      -------      --------
         Selling                       $   833,325   $  399,154        108.8
         Administration                  1,202,458    1,168,499          2.9
         Research & development            625,801      767,564        (18.5)
         Depreciation & amortization       437,060      184,618        136.7
         Interest expense                   17,778      184,897        (90.4)
                                          --------      -------
                                       $ 3,116,422   $2,704,732         15.2
                                          ========      =======

Selling  expenses for the nine months ended March 31, 1997 increased by $434,171
from the same  period of the prior year due to  increased  personnel  and travel
costs  associated  with the  establishment  of a direct  sales  force  for Focus
(totaling $577,703),  offset, in part, by a reduction in advertising expenses of
$101,147.

Administration  expenses  increased  by $33,959  due to the  acquisition  of the
leasing operation (an increase of $352,502), offset by decreases from consulting
arrangements   pertaining  to  public   relations  and  potential   mergers  and
acquisitions the Company has investigated.

Research and  development  costs were lower than the same period in the previous
year  as  personnel  were  redeployed  to  technical  support   activities  from
developmental programming.

Depreciation  and  amortization  increased due to  amortization  associated with
"Screenware",  a proprietary  computer program  application  generating language
that was purchased from Resource Finance Group, Ltd. on April 1, 1996.

Interest  expense  decreased due to the  retirement of private  placement  debt,
which  occurred  during June of 1996.  The remaining  interest  expense  relates
primarily to equipment purchased via capital leases.

Other  expense for the six months ended  December 31, 1995 included a write-down
of  Resource  Finance  Group,  Ltd.  common  stock  totaling  $375,000.  Digital
Sciences,  Inc. owned one million shares of Resource  Finance Group,  Ltd. until
just prior to the April 1, 1996 merger of the companies.



                                       11
<PAGE>


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

Liquidity and Capital Resources

During the first nine months of fiscal 1997, the Company used cash of $3,574,670
in its  operations.  The net loss for the nine  months  ended March 31, 1997 was
$3,413,759.  Non-cash  charges to income were $396,022.  Total net investment in
leases increased by $343,981 and accrued expenses, mostly related to liabilities
assumed  through the  acquisition  of The Neptune Group,  Inc.,  were reduced by
$234,524 via cash payments.

The Company  purchased  fixed assets  totaling  $158,545  during the nine months
ended March 31, 1997. In part, these purchases were financed by net additions to
long debt of $81,231.

Sources of cash included cash received from the exercise of warrants and options
of $698,016.

Cash and cash  equivalents  were $283,906 at March 31, 1997,  which  represented
less than one month of  operating  capital,  assuming no increase in current and
historical sales levels.  Management  believes that sales will increase over the
current levels during the remainder of the fiscal year. The Company is currently
seeking financing  sufficient to provide operating capital.  Management believes
the Company will be able to raise  additional  capital and will make  additional
sales  sufficient to provide adequate working capital for the next twelve months
of operations. Subsequent to March 31, 1997, the Company has received orders for
Focus systems totaling over $500,000.

Commitments and Contingencies

On June 28, 1996,  the Company  acquired  certain  assets of The Neptune  Group,
Inc.,  a leasing  company.  In  connection  with this  acquisition,  the Company
assumed certain  liabilities of The Neptune Group,  Inc.  including that certain
lawsuit entitled The Neptune Group, Inc. vs. MKT, Inc. (Case No. 3 94CV-587 AWT)
filed in the United States  District  Court for the District of  Connecticut  on
April 8, 1994.  This case  involves  claims by The  Neptune  Group,  Inc.  for a
declaratory  judgment and damages for breach of contract and a  counterclaim  by
MKT,  Inc.  claiming  that  certain  commissions  were  unpaid in the  amount of
$753,419.50  plus interest.  Without further  discovery from MKT, Inc. and third
parties,  the  Company  has no basis to  estimate  the  possible  damages on The
Neptune  Group,  Inc.'s  claims  or the  outcome  with  respect  to MKT,  Inc.'s
counterclaims.  The Neptune Group,  Inc. has 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 The Neptune Group, Inc. The
motion has not yet been ruled upon by the  Court.  Management  does not  believe
that this legal action,  when ultimately  concluded and determined,  will have a
material adverse effect upon IDSI's financial  condition,  results of operations
or liquidity.


                                       12


<PAGE>


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


Subsequent Events

In April, 1997, Digital Sciences, Inc. (a wholly owned subsidiary of Intelligent
Decision  Systems,  Inc.) signed a letter of intent with Pioneer  EyeCare,  Inc.
Pioneer  EyeCare,  Inc.  is a Physician  Practice  Management  Corporation  that
intends to acquire,  as well as offer management services to, its association of
over 200 independent eye care providers. The arrangement,  when completed,  will
allow Pioneer to implement  their  electronic  information  strategy  across its
entire network utilizing Digital Sciences, Inc.'s Focus system and technology.

Also in April,  1997 Digital  Sciences,  Inc. and MediPro,  Inc. (a wholly owned
subsidiary  of  BancPro,  Inc.)  reached an  agreement  to provide  health  care
receivable financing to users of Vision and Focus computing systems.



              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.






                                       13
<PAGE>

                         PART II - OTHER INFORMATION

Item 1.     Legal Proceedings:

               As reported in the Company's Form 10-KSB, The Neptune Group, Inc.
               ("Old  Neptune")  is involved in  litigation  with MKT,  Inc. Old
               Neptune  has 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.
               The motion has not yet been ruled upon by the Court.

               No other  reportable  events have  occurred  which would  require
               modification of the discussion under Legal  Proceedings set forth
               in the  Company's  Form 10-KSB  Annual Report for the fiscal year
               ended June 30, 1996.


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.

                         Exhibit 27 -  Financial Data Schedule

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

                         1.  The  Company  filed a  report  on Form 8-K with the
                             Commission on January 3, 1996 reporting a change in
                             the Company's  principal  auditors from the firm of
                             Wilber &  Townshend,  P.C. to the firm of Coopers &
                             Lybrand.


                                      14

<PAGE>







                                  SIGNATURES



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







                                        INTELLIGENT DECISION SYSTEMS, INC.


Date: May 14, 1997                       /s/ Mark A. Babin
                                         --------------------------
                                         Mark A. Babin
                                         President
                                         Chief Financial Officer




[Mark A. Babin is signing in the dual capacities as (i) the  principal financial
officer, and (ii) a duly authorized officer of the Company.]




                                       15