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

                                 __________
    
                                 FORM 10-Q


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



    For the quarterly period ended:            Commission file number:
           March 31, 1998                              0-26614
                               ___________

                                MVSI, INC.
            (Exact Name of Registrant as Specified In Its Charter)



             Delaware                                 54-1707718
  (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                  Identification No.)

   8133 Leesburg Pike, Suite 750, Vienna, VA             22182
   (Address of principal executive offices)            (Zip code)


                              (703) 356-5353
             (Company's telephone number, including area code)
                                ___________

    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 past 90 days.
Yes [X]  No [ ] 

    As of March 31, 1998, 15,771,446 shares of the Registrant's Common Stock,
$.01 par value, were outstanding. 

<PAGE>

                                MVSI, INC.


                                  INDEX


	
PART I.  FINANCIAL INFORMATION                                Page

Item 1.  Financial Statements.                                  3

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations.        14


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.                     19


SIGNATURES                                                     20

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1:  Financial Statements

MVSI, Inc. and Subsidiaries

Contents
----------------------------------------------------------------------------


Interim Consolidated Financial Statements

  	Interim Consolidated Balance Sheets	                            4

  	Interim Consolidated Statements of Operations                  	5

  	Interim Consolidated Statements of Cash Flows                  	7

  	Notes to Interim Consolidated Financial Statements             	8


<PAGE>

MVSI, Inc. and Subsidiaries
Interim Consolidated Balance Sheets

<TABLE>
<CAPTION>
									                                    March 31,      September 30,
	                                              1998		           1997	
ASSETS	                            								 (Unaudited)	     (Audited)
-----------------------------------------------------------------------------
<S>                                          <C>             <C>
Current Assets
	 Cash and cash equivalents               	$		2,571,069	    $		1,704,724
 	Investments	                             		12,377,286	     		2,833,931
	 Accounts receivable, net of
   allowance for doubtful accounts 	        		8,922,010	     		6,399,507
	 Inventory		                                	3,735,420     			3,619,030
	 Tax credits and income tax receivable	      		297,735	       		306,283
	 Prepaid expenses	                           		316,402	       		219,382
                                           -------------    -------------  
Total Current Assets                      		 28,219,922     	 15,082,857

Property and Equipment, net 	               		1,053,680	       		984,290
Capitalized Software Costs	                   		168,750     			1,723,138
Goodwill, net of accumulated amortization   		5,344,650      		5,641,582
Investment in Joint Venture	                       		-        			262,413
Deferred Tax Asset	                           		766,118	     		1,655,471
Other Assets	                                  		64,783	       		141,082
                                            ------------    -------------
                                      				$		35,607,903	   $		25,490,833
                                            ============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
 	Line of credit and financing
    arrangements                         	$ 		4,104,867	   $ 		1,397,943
	 Accounts payable and accrued
    liabilities 	                           		4,683,953	     		5,290,531
 	Shareholder loans and interest	             		476,079		       	737,208
                                             -----------     ------------
Total Current Liabilities	                  		9,264,899		     	7,425,682

Stockholders' Equity
	 Common stock, $.01 par value,
   50,000,000 shares authorized, 
		 17,740,620 and 11,590,000 shares
   issued, respectively		                      	177,406	       		115,900
 	Stock subscription receivable		             	(150,000)	     		(150,000)
 	Additional paid-in capital              			49,289,415	    		24,599,441
	 Treasury stock, at cost		                	(11,405,141) 	     	(572,660)
	 Accumulated deficit		                    	(11,517,228)   			(5,366,056)
	 Unrealized gain (loss) on
   investments available for sale		             	41,310	      		(205,182)
 	Cumulative translation adjustment 	          	(92,578)     			(356,292)
                                            ------------     ------------
Total Stockholders' Equity		                	26,343,004	     	18,065,151
                                            ------------     ------------
                                      				$		35,607,903	   $		25,490,833
                                            ============     ============
</TABLE>
The accompanying notes are an integral part of these statements.


<PAGE>

MVSI, Inc. and Subsidiaries
Interim Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                              	[RESTATED]
Three Months ended March 31,	                       1998		        1997	
-----------------------------------------------------------------------------
							                                      	  	(Unaudited)   (Unaudited)
<S>                                              <C>            <C>  
Sales	                                      			$		14,823,275 	$		8,162,627
Cost of Sales	                                  		13,425,976	  		6,997,174
                                                 ------------  ------------ 
Gross Profit                                    			1,397,299		  	1,165,453

Expenses
	 Selling                                       			1,200,350    			170,891
	 Administrative	                                  		653,317	    		543,396
	 Depreciation and amortization	                   		227,200	     		73,187
                                                  -----------  ------------
					                                            		2,080,867			    787,474
                                                  -----------  ------------ 

Earnings (Loss) from Continuing Operations	       		(683,568)	   		377,979

Interest Income	                                   		339,442	    		120,308
Interest and Financing Charges	                    		(15,168)	    		65,605
                                                  -----------  ------------
Earnings (Loss) From Continuing Operations 
	Before Income Taxes	                             		(359,294)	   		563,892

Income Tax Provision 
 	Current	                                              			-    			(20,000)
	 Deferred		                                             		-     			79,870
                                                  -----------  ------------
					                                                    		- 	    		59,870
                                                  -----------  ------------
Net Earnings (Loss) From
  Continuing Operations                         	$		(359,294)  	$		600,128
                                                  -----------   -----------
Discontinued Operations:
	Earnings (loss) from discontinued operations,
  including tax effect of $0.00 and $(138,162),
  respectively	                                   		(748,495)	     104,081
	(Loss) on disposal, including tax effect of
  $1,223,900 and $0.00, respectively	            	(4,479,822)		         -
                                                  -----------   -----------  
Net earnings (loss) from discontinued
  operations                                      (5,228,317)      104,081
                                                  -----------   -----------
Net earnings (loss)                             $ (5,587,611)  $   608,103
    
Basic earnings (loss) per share,
  continuing operations                         $      (0.02)  $      0.05
Basic earnings (loss) per share,
  discontinued operations                              (0.33)         0.01
                                                  -----------    -----------
Basic earnings (loss) per share                 $      (0.35)  $      0.06
                                                  ===========    ===========

Weighted average shares outstanding, basic        15,924,611    10,710,972


Diluted earnings (loss) per share,
  continuing operations                         $      (0.02)  $      0.05
Diluted earnings (loss) per share,
  discontinued operations                              (0.33)         0.01
                                                 -------------  ------------
Diluted earnings (loss) per share               $      (0.35)  $      0.06
                                                 =============  ============

</TABLE> 
The accompanying notes are an integral part of these statements


<PAGE>

MVSI, Inc. and Subsidiaries
Interim Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                 	[RESTATED]
Six Months ended March 31,	                          1998  		        1997	
-----------------------------------------------------------------------------
					                                        		  	(Unaudited) 	  (Unaudited)
<S>                                               <C>           <C>
Sales			                                        	$ 27,536,800	  $ 14,922,667
Cost of Sales                                    		24,427,450     12,628,325
                                                  ------------  -------------
Gross Profit	                                     		3,109,350      2,294,342

Expenses
 	Selling			                                       	1,096,577        323,764
	 Administrative	                                 		2,361,654      1,104,407
	 Depreciation and amortization	                     	447,862        143,845
                                                  ------------  -------------
						                                             	3,906,093      1,572,016
                                                  ------------  -------------

Earnings (Loss) from Continuing Operations         	 (796,743)       722,326

Interest Income	                                     	434,019        312,408
Interest and Financing Charges                      		(58,574)       106,190
                                                  ------------  -------------
Earnings (Loss) From Continuing Operations 
	Before Income Taxes		                              	(421,298)   	 1,140,924   

Income Tax Provision 
 	Current	          		                                     	-       		90,000
	 Deferred		                                              		-     			116,091
                                                  ------------   ------------
 				                                                     		- 	    		206,091
                                                  ------------   ------------

Net Earnings (Loss) From Continuing
  Operations                                     	$		(421,298)	   $ 	934,833
                                                  ------------   ------------
Discontinued Operations:
  Earnings (loss) from discontinued operations,
   including tax effect of $0.00 and $(298,162),
   respectively                                    (1,250,052)       273,398    
 (Loss) on disposal, including tax effect of
   $1,223,900 and $0.00, respectively              (4,479,822)             -
                                                  ------------    -----------
Net earnings (loss) from discontinued
  operations                                       (5,729,874)       273,398
                                                  ------------    -----------
Net earnings (loss)                              $ (6,151,172)   $ 1,208,231    
                                                  ============    ===========

Basic earnings (loss) per share,
  continuing operations                          $      (0.03)   $      0.09
Basic earnings (loss) per share,
  discontinued operations                               (0.40)          0.02
                                                 --------------  ------------
Basic earnings (loss) per share                  $      (0.43)   $      0.11
                                                 ==============  ============

Weighted average shares outstanding, basic         14,267,086     10,728,995


Diluted earnings (loss) per share,
  continuing operations                          $      (0.03)   $      0.08
Diluted earnings (loss) per share,
  discontinued operations                               (0.40)          0.02
                                                 --------------  ------------
Diluted earnings (loss) per share                $      (0.43)   $      0.10
                                                 ==============  ============

Weighted average shares outstanding, diluted       14,267,086     12,497,734


</TABLE>
The accompanying notes are an integral part of these statements.


MVSI, Inc. and Subsidiaries
Interim Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                            	     [RESTATED]
Six Months ended March 31,	                          1998		          1997	
								                                       	 (Unaudited)	   	 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<S>                                           <C>                <C>
Cash Flows from Operating Activities
	Net income (loss)                            	$		(563,561)      	$		600,128

	Adjustments to reconcile net income to net cash 
		from operating activities:
		Deferred income taxes	                               		-  		      	(13,779)
		Depreciation and amortization		                  331,573 		        	81,824
		Unrealized loss on investments	                  	35,951          			    -  
		(Gain) loss on foreign exchange	                     		-  	      		(31,228)
		Changes in operating assets and liabilities,
   net of acquisitions and dispositions:
			Decrease (increase) in accounts receivable			(1,182,914)	      		(636,067)
			(Increase) decrease in inventory		            	(391,909)			        27,457
			(Increase) in tax credits and income
    taxes receivable                             			33,373		         	(7,898)
			Decrease in prepaid expenses	                  		88,083	        		(58,383)
			(Increase) in other assets			                     4,537	           		(623)
			(Decrease) in accounts payable and
    accrued liabilities			                        (137,282)	      		(246,480)
						                                         ------------     -------------
	Net Cash (Used in) Operating Activities	     		(1,782,149)	      		(285,049)
                                               ------------     -------------

Cash Flows from Investing Activities
	Net investment purchases	                   		(18,202,848)	             		-  
	Borrowings on margin against investments		      2,229,463      			1,707,268
	Property, plant and equipment purchases	       		(131,583)		      	(136,930)
	Capitalized software costs		                          	-        			(300,730)
						                                         ------------     -------------
	Net Cash (Used in) Provided by
   Investing Activities	                     		(16,104,968)	     		1,269,608
                                               ------------     -------------

Cash Flows from Financing Activities
	Net increase (decrease) in line of credit		      	397,565		       	(77,411)
	Proceeds from shareholder loans		                     	-          			4,242
	Payment of shareholder loans	                  		(105,329)	            	-  
	Purchase of treasury stock	                  		(7,052,844)           			-  
	Proceeds from issuance of common stock               		-            			150
	Proceeds from conversion of warrants		        	24,547,712	        		59,850 
                                              -------------     -------------
Net Cash Provided by (Used in)
  Financing Activities	                       		17,787,104		       	(13,169)
                                              -------------     -------------

Effect of Exchange Rate Changes on Cash		         	161,564		       	(30,977)
                                              -------------     -------------

Net Increase in Cash                             			61,551	       		940,413
Cash at Beginning of Period	                    	1,704,724       			313,890
                                              -------------     -------------
Cash at End of Period                        	$		1,766,275    	$		1,254,303
                                              =============     =============
</TABLE>
The accompanying notes are an integral part of these statements.


<PAGE>

MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements
-----------------------------------------------------------------------------
March 31, 1998
-----------------------------------------------------------------------------

NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and
with the instructions to Form 10-Q.  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 considered necessary for a fair presentation have been
included. In March 1998, the Company discontinued its Canadian machine
vision operations as described in Note C.  The accompanying Consolidated
Statements of Operations and Consolidated Statements of Cash Flows have
been reclassified (restated) to reflect the discontinued operations
treatment. The results of continuing operations for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected
for the full year. For further information, refer to the financial
statements and footnotes included in the Company's audited financial
statements for the fiscal year ended September 30, 1997.


NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Nature of Operations
----------------------------------------------
The accompanying interim consolidated financial statements include the
accounts of MVSI,Inc. (a Delaware corporation), and its five wholly-owned
subsidiaries: Socrates Technologies, Inc., a Maryland corporation,
integrates, installs, supports and provides training on high-end computer
and communication equipment and is headquartered in Largo, Maryland; Technet
Computer Services, Inc., a Virginia corporation, provides commercial software
systems, customized software development and software maintenance services,
to include Year 2000 (Y2K) solution services, for corporate and government
customers and is headquartered in Vienna, Virginia; JMR Distributors, Inc.,
a Virginia corporation, specializes in the purchase and sale of computer
memory chips and network equipment and is headquartered in Lorton, Virginia;
Expert, Inc., a New York corporation assembles and markets proprietary and
generic computer system products and services for advanced integration and
networking projects and is headquartered in Fresh Meadows, New York; and MVS
Modular Vision Systems,Inc., a Canadian corporation, engaged in the design
and manufacture of proprietary machine vision products and systems and
headquartered in Montreal, Quebec (collectively referred to as the
"Company"). In March 1998, the Company discontinued its machine vision
operations as described in Note C. The results of operations of Expert are
included in the accompanying financial statements since the April 1, 1997
acquisition date and the results of Technet are included in the accompanying
financial statements since the July 1, 1997 acquisition date. Significant
intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition
-------------------
Sales are recognized upon shipment of a finished product when title to the
product transfers to the customer.  Typical terms of sale do not provide the
customer with the right of return except for defective products, which are
covered either by the Company's warranty or by the warranty of the original
equipment manufacturer in instances where the Company acts as a distributor. 
Revenue from services is generally recognized as the services are rendered 
using contractual billing rates.  Revenue billed in advance of customer 
acceptance is deferred until such time as acceptance occurs.  Amounts 
received from customers prior to shipment are recorded as deposit
liabilities.


<PAGE>

MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements-Continued
-----------------------------------------------------------------------------
March 31, 1998
-----------------------------------------------------------------------------

NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include cash and money market accounts.

Investments
-----------
Investments consist of a short-term U.S. treasury mutual fund and a prime
income trust fund, which bear interest at 5.25% and 7.20 %, respectively, and
the Company's investment in common stock of e-Net, Inc., which is accounted
for using the cost method.  The market value of the short-term U.S. treasury
and prime income trust mutual funds and the Company's investment in the
common stock of e-Net, Inc., at March 31, 1998, was $10,752,286 and
$1,625,000, respectively. In accordance with Statement of Financial
Accounting Standards No. 115, the Company has classified these securities as
available-for-sale, and recorded the securities at fair value, based on
quoted market prices, with the unrealized gains or losses, reported in
stockholders' equity at March 31, 1998.  During the three months ended
March 31, 1998, the Company recognized gains from the sale of mutual fund
investments of approximately $115,000.

Accounts Receivable
-------------------
Accounts receivable is stated at the unpaid balances, less allowance on
collectible accounts. Management periodically reviews its outstanding
accounts receivable to assess collectibility of balances based on past
experience and evaluation of current adverse situations which may affect
collectibility of receivables.  As of March 31, 1998, management has
established an allowance for doubtful accounts of approximately $154,000.  

Inventory Valuation
-------------------
Inventory is valued at the lower of cost and market.  Cost is determined
on a first-in, first-out (FIFO) basis.  Management evaluates obsolete and
slow-moving inventory at each reporting date and either excludry from the
valuation or provides for a necessary reserve to record inventory at the
lower of cost or market.  

Property and Equipment
----------------------
Property and equipment are carried at cost, net of an allowance for
accumulated depreciation and amortization.  Depreciation is computed on
equipment and furniture, principally using the double-declining balance 
method over estimated lives ranging from five to seven years.   
Leasehold improvements are amortized on a straight-line basis over the 
shorter of the lease term or estimated useful lives of the related assets.


<PAGE>

MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements-Continued
-----------------------------------------------------------------------------
March 31, 1998
-----------------------------------------------------------------------------

NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

Capitalized Software Costs
--------------------------
Capitalized software costs, net of amortization, related to the Company's
machine vision operations were written-off as a result of the Company
discontinuing those operations during the quarter ended March 31, 1998.
These charges have been included in the Loss on Disposal under Discontinued 
Operations in the accompanying financial statements. 

The remaining capitalized software costs relate to computer software acquired
in the July 1, 1997 Technet acquisition (See Company's audited financial 
statements for the fiscal year ended September 30, 1997).  Amortization 
expense related to these costs was $33,750 for the three months ended 
March 31, 1998.  The Company's policy is to amortize capitalized software 
costs by the greater of (a) the ratio that the current gross revenue for a 
product bears to the total current and anticipated future gross revenue for 
that product or (b) the straight-line method over the remaining economic life
of the product including the period being reported on.  It is reasonably 
possible that those estimates of anticipated future gross revenue, the 
remaining estimated economic life of the product, or both will be reduced 
significantly in the near term.  As a result, the carrying amount of the 
capitalized software costs may be reduced materially in the near term.

Goodwill
--------
Goodwill represents the excess of cost over the fair value of net assets
acquired in business combinations accounted for as purchases.  Goodwill is 
being amortized on the straight-line method over ten years.  Amortization 
expense charged to operations for the three months ended March 31, 1998 and 
1997, was $153,466 and $68,589, respectively.  Management regularly reviews 
the carrying value of goodwill against anticipated cash flows of each 
business in order to evaluate realizability.

Income Taxes
-----------
Deferred taxes are recognized, subject to valuation allowance, for temporary
differences in the timing of recognition of certain income and expenses using
the liability method. 

Using Estimates in Preparing Financial Statements
-------------------------------------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.  
Actual results could differ from those estimates.

Reclassifications
-----------------
As a result of the discontinued operations presentation of the Company's 
machine vision operations, certain amounts in the 1997 financial statements 
have been reclassified (restated) as required to conform to the 1998 
presentation.


<PAGE>

MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements-Continued
-----------------------------------------------------------------------------
March 31, 1998
-----------------------------------------------------------------------------

NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

Fair Value of Financial Instruments
-----------------------------------
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate 
the value:

The carrying amount approximates fair value for cash and cash equivalents,
accounts receivable, notes receivable, accounts payable, line of credit and 
other accrued liabilities.

Investment securities classified as current assets are based on quoted market
price.

Stock Options
-------------
The Company accounts for the value of stock options granted in accordance
with Accounting Principles Board Opinion No.25 (APB 25), whereby if stock 
options' exercise prices are set at fair market value or above at the 
measurement date, usually the date of grant, no compensation expense is 
recognized at that date.

The Financial Accounting Standards Board recently issued Statement of 
Financial Accounting Standards No. 123 (SFAS 123), "Accounting for 
Stock-Based Compensation", effective for fiscal years that begin after 
December 15, 1996.  The new standard encourages all entities to adopt a fair 
value based method of accounting for all employee stock option plans.  Under 
this method, compensation cost is measured at the grant date based on the 
value of the stock option award and is recognized over the service period, 
which is usually the vesting period.

Optionally, a Company may continue to use the intrinsic value method, as 
described by APB 25, that measures compensation costs only to the extent that
the option price is lower than the quoted market price of the stock at the 
date of the award.  In fiscal year 1998, the Company will continue the 
application of Opinion 25, but will comply with the pro forma disclosures of 
net income, and earnings per share, as if the fair value based method of 
accounting defined in SFAS 123 had been applied.

Earnings Per Share
------------------
In 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No.128 (SFAS 128), "Earnings Per Share", 
effective for periods ending after December 15, 1997.  This Statement 
establishes standards for computing and presenting earnings per share (EPS) 
and applies to entities with publicly held common stock or potential common 
stock.  This Statement simplifies the standards for computing earnings per 
share previously found in APB Opinion No. 15, "Earnings Per Share", and makes
them comparable to international EPS standards.  The Company adopted the 
provisions of SFAS 128, as required, during its first quarter of fiscal year 
1998.


<PAGE>

MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements-Continued
-----------------------------------------------------------------------------
March 31, 1998
-----------------------------------------------------------------------------

NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

Earnings Per Share - Continued
------------------------------
SFAS 128 replaces the presentation of primary EPS with a presentation of 
basic EPS.  It also requires a dual presentation of basic and diluted EPS on 
the face of the income statement for all entities with complex capital 
structures and requires a reconciliation of the numerator and denominator of 
the diluted EPS computation.  Basic EPS excludes dilution and is computed by 
dividing income available to common stockholders by the weighted-average 
number of common shares outstanding for the period.  Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock.  Diluted EPS is 
computed using the weighted-average number of common shares and dilutive 
potential common shares outstanding during the period. All earnings per share
amounts for all periods have been presented, and where necessary, restated to
conform to SFAS 128 requirements.

NOTE-DISCONTINUED OPERATIONS

In March 1998, the Company adopted a formal plan to sell its Canadian
machine vision subsidiary, MVS Modular Vision Systems.  The results of MVS
have been reported separately as a component of discontinued operations in
the accompanying Consolidated Statements of Operations and Consolidated
Statements of Cash Flows.  Prior year financial statements have been
reclassified (restated) to conform to the current year presentation.  In 
connection with the decision to discontinue the machine vision operations, 
the Company recorded a loss on disposal of discontinued operations 
of approximately $4,480,000, including tax effects of $1,223,900.  The
loss includes the write-off or write-down of specific assets to estimated
net realizable value and the anticipated loss through the June 30,
1998 estimated date of disposal.  Negotiations continue on the sale of MVS
and on the reduction of certain of the subsidiary's liabilities in an effort
to recoup a portion of the Company's investment in MVS.  There can be no
assurances, however, that these negotiations will result in definitive
agreements being reached or that the Company will be able to obtain
consideration in any such sale sufficient to recoup any portion of the
Company's investment. As a result the Company has not included any estimated
net proceeds in the accompanying financial statements related to the
potential sale of MVS. 

The Condensed Statement of Operations relating to the discontinued operations 
for the six months ended March 31, 1998 are presented below:

<TABLE>
<CAPTION>
                                                  Six Months
                                                    Ended
                                                March 31, 1998
 ---------------------------------------------------------------------------
<S>                                             <C>
Revenue                                          $   1,221,326               
Cost and Expenses                                    2,471,378
                                                 ----------------
Loss before income taxes                            (1,250,052) 
Income tax provision                                        -
                                                 ----------------
Net Loss                                         $  (1,250,052) 
                                                 ================ 
</TABLE>


<PAGE>
	
MVSI, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements-Continued
----------------------------------------------------------------------------
March 31, 1998
----------------------------------------------------------------------------

NOTE C-DISCONTINUED OPERATIONS-Continued

The assets and liabilities relating to the discontinued machine vision 
operations have not been segregated in the accompanying Consolidated Balance 
Sheets as of March 31, 1998 and September 30, 1997.  At March 31, 1998, net 
assets held for sale amount to approximately $1,366,000 and consist of net 
working capital and the estimated net realizable value of inventory, property
and equipment and other assets less related liabilities.


NOTE D-INVESTMENT BANKING RELATIONSHIP

Effective March 1, 1998, the Company engaged BlueStone Capital Partners, L.P.
(BlueStone) to serve as the Company's investment banker and financial
advisor.  In connection with the agreement, the Company paid BlueStone an
initial advisory fee and is committed to paying a monthly advisory fee for
their ongoing services.  Additionally, the Company is committed to issuing
BlueStone up to 200,000 warrants during 1998, to purchase the Company's
Common Stock at the closing bid price on specific dates of issuance.


<PAGE>

PART I.  FINANCIAL INFORMATION

Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations.
   
   The following discussion and analysis of the Company's historical results
of operations and of its liquidity and capital resources should be read in 
conjunction with the Company's consolidated financial statements and 
accompanying notes.

   Moreover, this Management's Discussion and Analysis of Financial Condition 
and Results of Operations may contain forward-looking statements concerning 
the Company's business and operations.  Except for the historical information
herein, certain matters discussed in this Report include forward-looking 
statements that may involve a number of risks and uncertainties, which 
projections and statements are made pursuant to the "Safe Harbor" provisions 
of the Private Securities Litigation Reform Act of 1995.  Actual risks and 
results may vary significantly based on a number of factors, including, but 
not limited to: risks in products and technology development; market 
acceptance of new products and continuing product demand, the impact of 
competitive products and pricing, and other factors mentioned in the 
Company's current and future filings with the Securities and Exchange 
Commission.

Overview
--------
   Effective March 31, 1998, the Company announced the discontinuance of its 
unprofitable machine vision operations, MVS Modular Vision Systems.  
The ongoing financial crisis in the Far East market and its negative impact 
on sales of MVS' microcomputer chip inspection scanners has continued to 
produce losses at MVS.  As a result, management concluded that it could no 
longer jeopardize the promising potential of the Company's Information 
Technology (IT) and software development businesses by continuing to support 
MVS.  The discontinuance of MVS' operations will require the completion of 
certain contractual obligations by the Company between now and the current 
anticipated disposal date of June 30, 1998. 

   The Company recorded record revenues from continuing operations of $14.8 
million during the first quarter of fiscal year 1998, an 82% increase over 
revenues of approximately $8.1 million for the comparable period in fiscal 
year 1997. 

   The Company has strategically turned its focus to software development and 
maintenance,especially in the Year 2000 (Y2K) remediation, testing, and 
assessment areas, and to IT services in order to achieve higher profit 
margins and profitability for the remainder of FY 1998 and beyond.  
Technet, the Company's software development and Y2K subsidiary, has been 
awarded several Y2K projects since the first of the year and is currently 
awaiting the outcome of a number of Y2K proposals and bids.  In addition to 
Y2K opportunities, Technet is experiencing a growing demand for its software 
consulting capabilities.

   In connection with MVSI's refocus into two principal business lines, the 
Company will consolidate its three IT subsidiaries.  The new consolidated 
companies will operate under the "Socrates Technologies" name and will 
concentrate on the higher profit margin areas, such as Technology training 
and computer services, currently being promoted by Socrates.  Socrates will 
continue the reseller business as a secondary business line to it core IT 
services and capabilities and will refocus the reseller businesses from 
wholesale distribution to the more profitable business of retail sales to 
corporations and governments.


<PAGE>

Results of Operations
---------------------
Quarter Ended March 31, 1998 Compared to Quarter Ended March 31, 1997
---------------------------------------------------------------------

   The Company reported sales from continuing operations of $14,823,275 for
the three-month period ended March 31, 1998, as compared to $8,162,627 for
the same period in fiscal year 1997.  The increase in sales of $6,660,648 or
82% is attributable to the acquisitions of Expert, Inc., effective April 1,
1997 and the acquisition of Technet Computer Services, Inc. ("Technet"),
effective July 1, 1997, and internal growth at Socrates as a result of the
strong increase in demand for the Company's Information Technology (IT)
products and services. 

   The Company's gross margin from continuing operations decreased to 9.4% 
for the three months ended March 31, 1998, as compared to 14.2% for the 
three-month period ended March 31, 1997.  The decrease in margins as a 
percentage of sales was due principally to increased market price pressures 
and product mix which resulted in an increase in revenues in the relatively 
lower gross profit margin areas of computer distribution and reselling.

	For the three months ended March 31, 1998, selling expenses related to 
continuing operations increased by $482,426 (282%).  The increase in selling 
expenses, over those of the prior year, are primarily a result of the 
Company's acquisition of Expert and Technet and the Company's focus 
and commitment to marketing the Socrates Technologies "brand name" and 
Technet's vast Y2K capabilities.  Administrative expenses increased $656,954 
(121%) to $1,200,350 for the three months ended March 31, 1998, as a result 
of an increase in the Company's overall level of operations and the 
acquisitions of Expert and Technet.

   Interest income, net of interest expense and financing charges, increased 
by $138,361 from $185,913 to $324,274 for the three-months ended March 31, 
1998.  The increase is primarily attributable to increased interest income 
due to higher investment balances and higher interest rates earned in the 
Company's short-term mutual fund investments coupled with a related reduction
in margin loan interest.  The increase also includes gains realized on the 
sale of certain mutual fund investments during the quarter. 

	  The Company has net operating loss and research expenditure carryforwards 
available to offset future taxable income generated in Canada totaling 
approximately $8,000,000 at March 31, 1998, expiring in 2010, and investment 
tax credits of approximately $1.5 million available as a direct offset to 
taxes payable in the future.   In the event a change in ownership occurs in 
the Company's discontinued Canadian operations, use of all or a portion of 
these Canadian generated net operating loss and research expenditure 
carryforwards could be affected.  In addition, the Company has net operating 
loss carry forwards available to offset U.S. taxable income of approximately 
$6,000,000 at March 31, 1998, expiring in 2011.  However, in the event a 
change in control in the Company occurs in the future, use of all or a 
portion of the U.S. carryforwards could be affected. 

  	As of March 31, 1998, the Company has recorded net deferred tax assets 
totaling approximately $766,000 relating to tax benefit derived from the 
Company's operation in the United States. Recoverability of this asset is 
dependent upon the Company generating future taxable income in the United 
States.  The Company reviews the valuation allowance quarterly to determine 
the future realizability of these deferred tax assets.

<PAGE>

	  The Company experienced a net loss from continuing operations of 
$359,294 or $(.02) per share for the three months ended March 31, 1998, as
compared to net income of $504,022 or $0.05 per share for the three months 
ended March 31, 1997. 

  	MVSI reported a loss from discontinued operations, net of tax effect, of 
$748,495 in the second quarter of fiscal 1998, versus income from 
discontinued operations of $104,081 in the second quarter of fiscal 1997.  
The loss in the 1998 fiscal second quarter reflected the inability ofthe 
Company's Canadian machine vision operations to cover operating costs from 
gross profits on product sales.

	  As a result of the discontinuance of the Company's machine vision 
operations, effective March 31, 1998, MVSI reported a loss on disposal of 
discontinued operations, net of tax effect, of $4,479,822 for the second 
quarter of fiscal 1998.  See Note C in the Notes to Interim Consolidated 
Financial Statements and the Overview section in Management's Discussion and 
Analysis, above.

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

  	The Company reported sales from continuing operations of $27,536,800 for 
the six-month period ended March 31, 1998 as compared to $14,922,667, for the
same period ended March 31, 1997.  The increase in sales of $12,614,133 or 
85% is attributable to the acquisitions of Expert and Technet and internal 
growth at Socrates as a result of the strong increase in demand for the 
Company's IT products and services.

  	The Company's gross margin from continuing operations increased to 
$3,109,350 for the six months ended March 31, 1998, from $2,294,342 in the 
same period a year ago, but decreased to 11% for the six months ended March 
31, 1998, as a percentage of sales.  The decrease was due principally to 
increased market price pressures and product mix which resulted in an 
increase in revenues in the relatively lower gross profit margin areas of 
computer distribution and reselling.

  	 For the six months ended March 31, 1998, selling expenses increased by 
$772,813 (239%) to $1,096,577.  The increase in selling expenses, over those 
of the prior year, are primarily a result of the Company's acquisition of 
Expert and Technet and the Company's focus and commitment to marketing the 
Socrates Technologies "brand name" and Technet's vast Y2K capabilities. 
Administrative expenses increased $1,257,247 (114%) to $2,361,654 for the six
months ended March 31, 1998, as a result of an increase in the Company's 
overall level of operations and the acquisitions of Expert and Technet.

  	 The Company experienced a net loss from continuing operations of 
$421,298 or $(.03) per share for the six months ended March 31, 1998, as 
compared to net income of $934,833 or $0.09 per share for the six months 
ended March 31, 1997. 

   	MVSI reported a loss from discontinued operations, net of tax effect, of 
$1,250,052 for the six months ended March 31, 1998, versus income from 
discontinued operations of $273,398 for the same period of fiscal 1997.  The 
loss in the first six months of fiscal 1998 reflected the inability of the 
Company's Canadian machine vision operations to cover operating costs from 
gross profits on product sales.

<PAGE>

	  As a result of the discontinuance of the Company's machine vision 
operations, effective March 31, 1998, MVSI reported a loss on disposal of 
discontinued operations, net of tax effect, of $5,729,874 for the six 
months ended March 31, 1998.

Capital Resources, Liquidity and Backlog
----------------------------------------
  	As of March 31, 1998, the Company had working capital of $18,955,023 
compared to $8,105,969 as of March 31, 1997.  The Company's prior year 
acquisitions and the general future expansion of the Company's primary 
business lines will require sufficient working capital to finance increases 
in inventory and accounts receivable comparable to or greater than the 
increase experienced in the three-months ended March 31, 1998 (see
Consolidated Statements of Cash Flows).   With the enhanced liquidity of the 
Company as a result of the December 1997 Warrant Redemption, the Company 
believes that existing cash and cash equivalents on hand and investments will
be sufficient to meet the Company's working capital and other financing 
requirements for the foreseeable future.  The Company continues to have no 
significant long-term debt outstanding as of March 31, 1998.

	  The Company previously had a bank line of credit with a Canadian bank for 
support of its Canadian operations temporary cash flow requirements, with 
interest payable monthly at the prime rate plus .75%.  During the quarter 
ended March 31, 1998, the Company paid off the then outstanding line of 
credit balance of approximately $1,150,000.

  	The Company also maintains a credit agreement with a local finance company
for inventory financing for one of its subsidiaries.  The agreement provides 
the Company with the ability to pay certain inventory balances (purchases) in 
scheduled interest-free installments.  Borrowings outstanding under the 
agreement, at March 31, 1998 and 1997, amounted to $4,087,784 and $603,326, 
respectively.  The agreement is subject to annual renewal and is 
collateralized by all present and future accounts receivable and inventory of
the Company's subsidiary and is guaranteed by MVSI, Inc.

  	The Company has a loan outstanding with a principal stockholder/officer 
(Edward Ratkovich) for monies advanced to the Company in a previous fiscal.  
The loan bears interest at 9% and is due on demand.  No repayments were made 
during fiscal year 1997 or during the six months ended March 31, 1998.  Total
loans and accrued interest outstanding at March 31, 1998 and 1997, total 
$247,390 and $230,788, respectively.

  	Additionally, two other officers loaned subsidiaries, for which they are 
employed, amounts on an interest bearing, demand basis prior to being 
acquired by the Company.  During the six months ended March 31, 1998, 
approximately $265,000 was repaid to these officers.  At March 31, 1998, the 
balance on the one remaining loan, including interest, was $228,689.

  	In February 1997, the Company converted a $1.25 million note with e-Net, 
Inc. to 250,000 shares of e-Net, Inc. common stock. The 250,000 shares of 
e-Net common stock owned by MVSI (classified as investments in the 
accompanying balance sheet) were registered as part of e-Net's initial 
public offering (IPO) and as of April 8, 1998 became eligible for sale.

  	As of March 31, 1998, the Company had 1,969,174 shares of its common stock
held in treasury, of which 712,200 shares (at a cost of $3,850,613) were
purchased during the three months ending March 31, 1998.  The shares held in
treasury were repurchased as part of two authorized, and publicly announced,
open market stock and warrant repurchase programs during calendar year 1997.
The Company may, from time-to-time, continue to buy back additional MVSI
securities in open market or block transactions in compliance with U.S.
Securities and Exchange Commission regulations.

<PAGE>

  	The Company and its representatives may from time to time make written or 
oral forward-looking statements, including statements contained in the 
Company's filings with the U.S. Securities and Exchange Commission and in its
reports to stockholders.  In connection with the "safe harbor" provisions of 
the Private Securities Litigation Reform Act of 1995, the Company is hereby 
identifying important factors that could cause actual results to differ 
materially from those contained in any forward-looking statement made by or 
on behalf of the Company.  Any such statement is qualified by reference to 
the following cautionary statements.

	  The Company's operating results could be affected by a number of factors. 
They include the availability and cost of components, an unexpected inability
to manage expenses relative to sales growth, and an inability to anticipate 
downward price pressures by customers using our products and services. Also, 
there is the potential problem of competing with companies having 
significantly greater financial, technical and market resources than the 
Company.

  	A significant percentage of the Company's sales to major customers 
historically has occurred in the last month of a quarter.  Changes in 
purchasing patterns by one or more of the Company's major customers, and the 
inability of the Company to anticipate in advance the mix of customer orders 
and its ability to ship the necessary quantities of product near the end of a
fiscal quarter, could result in material fluctuations in quarterly operating 
results.
	
	  The Company participates in competitive industries marked by changing 
technology, which could result in volatility of the Company's common stock 
price.  Additionally, any shortfall in revenue or earnings from the levels 
expected by securities analysts could have an immediate and significant 
effect on the trading price of the Company's common stock in any given period.  
Moreover, it is possible the Company may not learn of such shortfalls until 
late in the fiscal quarter, which could result in an even more immediate and 
adverse effect on the trading price of the Company's stock.


<PAGE>

PART II.  OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K.
          ---------------------------------  

    	a.  	Exhibits. 

        		Exhibit 27, Article 5 - Financial Data Schedule

	
    	b.  	Reports on Form 8-K. 
          --------------------
		        No reports on Form 8-K were filed during the quarter ended
          March 31, 1998. 


<PAGE>

                              SIGNATURES


    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                    									       MVSI, INC.


May 14, 1998                          					By: 	  EDWARD RATKOVICH  
                                                  ----------------
									                                         Edward Ratkovich
								    	                                   Chairman of the Board