UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1

(Mark One)

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

    For The 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 Number:  0-25530



                             LIFERATE SYSTEMS, INC.
             (Exact name of Registrant as specified in its charter)

               MINNESOTA                                 41-1682994             
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)         

                              7210 METRO BOULEVARD
                             EDINA, MINNESOTA 55439
          (Address of principal executive offices, including zip code.)

                                 (612) 844-0599
                         (Registrant's telephone number)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]   No [ ]

As of April 30, 1998, there were 12,485,000 shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (check one):  Yes ____  No __X__

<PAGE>


                             LIFERATE SYSTEMS, INC.
                          INDEX TO FINANCIAL STATEMENTS


                                                                           PAGE
                                                                           ----
ITEM 1. FINANCIAL STATEMENTS

           Condensed Balance Sheets -                                       3
           March 31, 1998 and December 31, 1997

           Statements of Operations -                                       4
           Three Months Ended March 31, 1998 and 1997
           and Date of Inception to March 31, 1998.

           Condensed Statements of Cash Flow -                              5
           Three Months Ended March 31, 1998 and 1997
           and Date of Inception to March 31, 1998.

           Notes to Condensed Financial Statements                          6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                                7

PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                    9


                                       2

<PAGE>


                             LIFERATE SYSTEMS, INC.
                          (A Development Stage Company)
                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                    MARCH 31,      December 31,
                                                                      1998             1997
                                                                    RESTATED         Restated
                                                                    --------         --------
ASSETS                                                             (UNAUDITED)        (Note)
<S>                                                               <C>             <C>         
Current assets:
      Cash and cash equivalents                                   $  1,936,700    $    764,200
      Accounts receivable, less allowance of $70,350
      at March 31, 1998 and $62,850 at December 31, 1997               478,900         278,200
      Prepaid expenses and other current assets                         31,900          59,800
                                                                  ------------    ------------
Total current assets                                                 2,447,500       1,102,200

Furniture and fixtures                                                 177,600         177,600
Computer equipment                                                     840,400         872,000
                                                                  ------------    ------------
                                                                     1,018,000       1,049,600
Less accumulated depreciation                                          677,500         635,600
                                                                  ------------    ------------
                                                                       340,500         414,000
Software development costs, net of amortization
 of $5,900 at March 31, 1998                                           114,900          28,600
                                                                  ------------    ------------

Total Assets                                                      $  2,902,900    $  1,544,800
                                                                  ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
      Accounts payable and other accrued liabilities              $    340,700    $    299,600
      Other current liabilities                                          5,200           3,200
      Current portion of long-term debt
       and capitalized lease obligations                                10,400          12,300
                                                                  ------------    ------------
Total current liabilities                                              356,300         315,100

Long-term debt and capital lease obligations                         3,112,000       3,106,500
Deferred rent                                                            2,000           4,900
Deferred revenue                                                       185,400         172,300

Shareholders' equity (deficit):
      Preferred stock, no par value:
        Authorized shares - 1,000,000
        Issued and outstanding shares-none in 1998 and 1997               --              --
      Common stock, no par value:
        Authorized shares - 75,000,000
        Issued and outstanding shares - 12,485,000 at March 31,
        1998 and 8,485,000 at December 31, 1997                     21,975,800      20,016,400
      Deficit accumulated during the development stage             (22,728,600)    (22,070,400)
                                                                  ------------    ------------
Total shareholders' equity (deficit)                                  (752,800)     (2,054,000)
                                                                  ------------    ------------
Total liabilities and shareholders' equity (deficit)              $  2,902,900    $  1,544,800
                                                                  ============    ============
</TABLE>


Note: The December 31, 1997 balance sheet has been derived from the restated
December 31, 1997 audited financial statements.


                                       3

<PAGE>


                             LIFERATE SYSTEMS, INC.
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           JULY 18, 1990
                                                    THREE MONTHS              (DATE OF
                                                   ENDED MARCH 31,         INCEPTION) TO
                                               1998                        MARCH 31, 1998
                                             RESTATED          1997           RESTATED
                                             --------          ----           --------
                                                             
<S>                                       <C>             <C>             <C>         
Net revenues                              $    273,900    $    198,800    $  2,084,500
Cost of revenues                               222,400         263,300       2,212,200
                                          ------------    ------------    ------------
Gross profit                                    51,500         (64,500)       (127,700)

Operating expenses:
      Sales and marketing                      202,800         398,600       6,166,100
      Research and development                 221,500         396,700       9,034,700
      General and administrative               300,700         488,300       7,680,700
                                          ------------    ------------    ------------
Total operating expenses                       725,000       1,283,600      22,881,500
                                          ------------    ------------    ------------
Loss from operations                          (673,500)     (1,348,100)    (23,009,200)
Interest income and other income, net           25,000          15,000         426,600
Interest expense                                 9,700             300         346,000
                                          ------------    ------------    ------------
Net loss before extraordinary item            (658,200)     (1,333,400)    (22,928,600)
Extraordinary item - debt restructuring           --              --           200,000
                                          ------------    ------------    ------------
Net loss                                  $   (658,200)   $ (1,333,400)   $(22,728,600)
                                          ============    ============    ============

Net loss per share - basic and diluted    $      (0.06)   $      (0.35)   $     (10.66)
                                          ============    ============    ============

Weighted average number of common
  shares outstanding                        11,151,667       3,819,708       2,131,920
                                          ============    ============    ============
</TABLE>


See accompanying notes


                                       4

<PAGE>


                             LIFERATE SYSTEMS, INC.
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                JULY 18, 1990
                                                                                                                   (DATE OF
                                                                                         THREE MONTHS            INCEPTION) TO
                                                                                        ENDED MARCH 31,           MARCH 31,
                                                                                     1998                            1998
                                                                                   RESTATED          1997          RESTATED
                                                                                   --------          ----          --------
<S>                                                                             <C>             <C>             <C>     
OPERATING ACTIVITIES
Net loss                                                                        $   (658,200)   $ (1,333,400)   $(22,728,600)
Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation                                                                    75,000          75,100         711,200
      Amortization of software development costs                                       5,900          25,300         157,200
      Amortization of discounts on long-term debt                                      8,400            --            57,800
      Value of stock options granted for services rendered                              --              --         1,001,500
      Value of warrants issued to note holders                                          --              --            43,500
      Convertible subordinated note issued for services rendered                        --              --         2,250,000
      Writedown of software development costs to net realizable value                   --              --           599,600
      Stock issued for services                                                         --              --           187,500
      Changes in operating assets and liabilities:
        Accounts receivable                                                         (200,700)        (13,800)       (478,900)
        Prepaid and other current assets                                              27,900          17,000         (26,600)
        Accounts payable and other accrued  liabilities                               43,100         104,000         681,700
        Deferred revenue                                                              13,100          (7,500)        185,400
        Deferred rent                                                                 (2,900)         (2,900)          2,000
                                                                                ------------    ------------    ------------
Net cash used in operating activities                                               (688,400)     (1,136,200)    (17,356,700)

INVESTING ACTIVITIES
Software development costs                                                           (92,200)           --          (871,700)
Purchase of furniture and equipment                                                   (2,400)        (32,300)       (994,900)
Proceeds from equipment sales                                                            900            --               900
                                                                                ------------    ------------    ------------
Net cash used in investing activities                                                (93,700)        (32,300)     (1,865,700)

FINANCING ACTIVITIES
Payments on notes payable and capital lease obligations                               (4,800)         (3,700)       (431,200)
Stock subscription received                                                             --              --             5,000
Proceeds from issuance of notes payable                                                 --            17,500       2,027,700
Proceeds from issuance of common stock                                             1,959,400          22,300      19,557,600
                                                                                ------------    ------------    ------------
Net cash provided by financing activities                                          1,954,600          36,100      21,159,100
                                                                                ------------    ------------    ------------

Increase in cash and cash equivalents                                              1,172,500      (1,132,400)      1,936,700
Cash and cash equivalents at beginning of period                                     764,200       2,072,000            --
                                                                                ------------    ------------    ------------
Cash and cash equivalents at end of period                                      $  1,936,700    $    939,600    $  1,936,700
                                                                                ============    ============    ============
</TABLE>


See accompanying notes


                                        5

<PAGE>


                             LIFERATE SYSTEMS, INC.
                          (A Development Stage Company)
                     Notes to Condensed Financial Statements
                                 March 31, 1998


1.   Organization and Description of Business

     LifeRate Systems, Inc. is a development stage enterprise engaged in
     marketing proprietary clinical software systems to health care providers
     and payors to produce information to measure and quantify the quality and
     cost of health care.

2.   Basis of Presentation

     The financial information presented as of March 31, 1998 and 1997 has been
     prepared from the books and records without audit. Financial information as
     of December 31, 1997 is based on audited financial statements of LifeRate
     Systems, Inc. but does not include all disclosures required by generally
     accepted accounting principles. In the opinion of management, all
     adjustments, consisting only of normal recurring adjustments necessary for
     a fair presentation of the financial information for the periods indicated
     have been included. For further information regarding the Company's
     accounting policies, refer to the financial statements and attached notes
     included in the Company's Form 10-KSB for the fiscal year ended December
     31, 1997 as filed with the Securities and Exchange Commission.

3.   Significant Accounting Policies

     In October 1997, the American Institute of Certified Public Accountants
     approved Statement of Position 97-2, "Software Revenue Recognition" ("SOP
     97-2"), which supersedes Statement of Position 91-1, "Software Revenue
     Recognition". SOP 97-2 was effective for transactions entered into in the
     first quarter of 1998. The adoption of the standards in SOP 97-2 did not
     have a significant impact on the Company's financial statements.

4.   Reclassified

     Certain prior year amounts have been reclassified to conform to the current
     year presentation.

5.   Restatement

     The Company has restated previously issued financial results for the year
     ended December 31, 1997. The restated financial results reflect the
     correction of an error related to the extraordinary gain recognized in a
     transaction recorded as a troubled debt restructuring. The following
     summarizes the impact of the restatement on operations for the three months
     ended March 31, 1998:

                                        As reported     Restated
                                        -----------     --------

          Net loss                      $(710,100)     $(658,200)

          Net loss per share --
            basic and diluted           $   (0.06)     $   (0.06)


                                        6

<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

Introduction

In January 1998, the Company completed the final phase of equity financing under
the securities purchase agreement the Company entered into in November 1997. See
"Liquidity and Capital Resources".

The Company released for commercial sale in January 1998 its LifeRate CLE
product, an entry-level product for the cardiac catheterization laboratory. In
March, this product was certified by the American College of Cardiology National
Cardiovascular Data Registry(TM) as being in compliance with the requirements
for data collection in order to participate in the data registry.

Results of Operations

The Company reported revenues of $273,900 for the three months ended March
31,1998. Revenues consisted of installation and interface development fees of
$229,300 and $44,600 of recurring license fees for the quarter. Revenues for the
current quarter increased $75,100, or 37.8%, over the $198,000 in revenues for
the three months ended March 31,1997. Revenues for the first quarter of 1997
consisted of $150,000 related to development fees under contractual agreement
and $48,000 of recurring license fees.

During the first quarter of 1997, the Company implemented a cost reduction
program to reduce levels of expenditures and conserve cash funds. As part of
this cost reduction program, the Company reduced employee head count during 1997
in order to more effectively match expenses with revenues.

Cost of revenues was $222,400 and $263,300 for the three months ended March
31,1998 and 1997, respectively. Amortization of capitalized software development
costs included in cost of revenues was $5,900 and $25,200 for the three months
ended March 31, 1998 and 1997, respectively. Royalty expense included in cost of
revenues was $0 and $14,900 for the three months ended March 31, 1998 and 1997,
respectively.

Sales and marketing expense was $202,800 for the three months ended March
31,1998, this is a decrease of $195,800, or 49.1%, from the three months ended
March 31, 1997. Expenses for the three months ended March 31, 1998 have declined
compared to the same period in 1997 due to the cost reduction program mentioned
above which resulted in reductions in payroll expenses, travel expenses and
other sales and marketing expenses.

Research and development expenses for the three months ended March 31,1998, net
of capitalized development costs, totaled $221,500 compared to $396,700 for the
same period in 1997. The Company capitalizes software development costs after
technological feasibility is achieved on new products and enhancements to
existing products. In the first quarter of 1998 the Company capitalized $92,200
of research and development expenses. No software development costs were
capitalized in the first quarter of 1997 as development efforts were focused on
enhancements that were released to customers when technological feasibility was
obtained. Research and development expenses have decreased from one year ago due
to the cost reduction program mentioned above. The cost reduction program
resulted in reductions in payroll expenses, travel expenses and other
development expenses. These decreases have been partially offset in the three
months ended March 31,1998 by increased recruiting expenses and consulting
expenses related to new product development. The Company plans to continue to
invest the resources needed to develop the product capabilities demanded by the
market place.

General and administrative expenses for the three months ended March 31,1998
totaled $300,700, a decrease of $187,600 or 38.4%, from expenses of $488,300 for
the same period in 1997. The three month period ended March 31, 1997 included
$93,900 in legal and professional fees related to the renegotiations of certain
royalty agreements and $53,900 in recruiting fees for a new chief executive
officer. The balance 


                                       7

<PAGE>


of the decrease is due to the cost reduction program started in the first
quarter of 1997, which resulted in reduced payroll expenses through lower head
count and reductions in other expenses.

Interest income and other income and expenses were $25,000 and $15,000 for the
three months ended March 31, 1998 and 1997, respectively. Changes in interest
income are due to fluctuations in the Company's cash balances. The Company
completed a significant equity financing in January 1998.

Interest expense for the three months ended March 31, 1998 was $9,700, an
increase of $9,400 over the prior year. This increase is due to amortization of
the discount recorded in 1997 on the Company's outstanding non-interest bearing
convertible promissory note.

Liquidity and Capital Resources

The Company has financed its operations since inception primarily through
private and public placement of Common Stock, and, secondarily from revenues.

In January 1998, the Company sold 4,000,000 shares of Common Stock at prices
ranging from $.50 to $.56 per share and warrants to purchase 4,000,000 shares of
Common Stock at an exercise price of $1.50 per share. The sale resulted in net
proceeds to the Company of $1,959,400. This sale of Common Stock completed the
final phase of the November 1997 securities purchase agreement whereby the
Company agreed to sell up to 9,000,000 shares of Common Stock and warrants.

At March 31, 1998 the Company had $1,936,700 in cash and cash equivalents, an
increase of $1,172,500 from December 31,1997. The increase was due to the sale
of Common Stock. During the first quarter of 1998 the Company used $688,400 of
cash to fund operations, $1,500 to purchase equipment and $92,200 to fund
capitalized software development costs. The Company does not have significant
capital equipment purchase commitments but does plan to continue to fund
software development efforts.

The Company estimates that its current cash balances will not be sufficient to
fund operations of the Company through the end of 1998 and that additional
operating capital will be needed during the fourth quarter of 1998. There can be
no assurance that the Company will be able to obtain additional financing on
satisfactory terms, or at all. If the Company is unable to obtain additional
financing it will be forced to cease operations.


                                        8

<PAGE>


                           PART II - OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     ITEM NUMBER                   ITEM                      METHOD OF FILING

     27.1             Amended Financial Data Schedule         Filed herewith


(b)  Reports on Form 8-K

The Company filed a Current Report on Form 8-K, dated January 30, 1998 to report
under "Item 1. Change in Control of Registrant" the final closing of the sale of
common stock and warants pursuant to a securities purchase agreement dated
November 14, 1997.

The Company filed a Current Report on Form 8-K, dated February 27, 1998 to
report under "Item 5. Other Events" that a shareholder had filed a lawsuit
naming the Company and certain other parties as defendants. The lawsuit contains
causes of action against the Company alleging fraud, deceit, negligent
misrepresentation and other wrong doings in connection with a private placement
of common stock conducted by the Company in December 1995 and January 1996. The
Company believes the claim to be without merit and plans to vigorously defend
this action.


                                       9


<PAGE>




                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the Registrant has
caused this Amendment to be signed on its behalf by the undersigned, thereunder
duly authorized.


Dated: November 5, 1998


                                       LIFERATE SYSTEMS, INC.




                                       By:/s/F.G. Hamilton
                                          ----------------
                                       F. G. Hamilton
                                       Acting Chief Executive Officer
                                       (Principal Executive Officer)




                                       By:/s/Kenneth G. Tarr
                                          ------------------
                                       Kenneth G. Tarr
                                       Acting Chief Financial Officer
                                       (Principal Financial and Accounting
                                       Officer)


                                       10

<PAGE>


                             LIFERATE SYSTEMS, INC.

                           EXHIBIT INDEX TO QUARTERLY
                              REPORT ON FORM 10-QSB
                  for the Quarterly Period ended March 31, 1998



ITEM NUMBER                       ITEM                        METHOD OF FILING

27.1             Amended Financial Data Schedule               Filed herewith


                                       11