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 the quarterly period ended September 30, 1998

           [ ] Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                 For the transition period from ______ to ______

                         Commission file number 0-20743


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


         Virginia                                         54-1515256
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

     4299 Carolina Avenue,                                   23222
 Building C, Richmond, Virginia                            (Zip Code)
(Address of principal executive office)

                                 (804) 228-5600
                           (Issuer's telephone number)

          _____________________________________________________________
(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  Securities  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 __.

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

        Common Stock, no par value - 4,672,433 shares as of November 12, 1998.

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

<PAGE>
 
                             OPEN PLAN SYSTEMS, INC.

                                Table of Contents

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

PART I.     FINANCIAL INFORMATION                                                                     Page

Item 1.    Financial Statements

           Consolidated Balance Sheets - September 30, 1998 (unaudited)                                1
              and December 31, 1997
 
           Consolidated Statements of Operations- Three and nine months                                2
              ended September 30, 1998 and 1997 (unaudited)

           Consolidated Statements of Cash Flows - Nine months                                         3
              ended September 30, 1998 and 1997 (unaudited)

           Notes to Consolidated Financial Statements - September 30, 1998                             4

Item 2.    Management's Discussion and Analysis of                                                     7
           Financial Condition and Results of Operations


PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                                                          13

Item 2.    Changes in Securities and Use of Proceeds                                                  13

Item 3.    Defaults Upon Senior Securities                                                            13

Item 4.    Submission of Matters to a Vote of                                                         13
              Security Holders

Item 5.    Other Information                                                                          14

Item 6.    Exhibits and Reports on Form 8-K                                                           15


SIGNATURES

</TABLE>
<PAGE>



                             OPEN PLAN SYSTEMS, INC.
                                     PART I
                              FINANCIAL INFORMATION
                          Item 1: Financial Statements
                           Consolidated Balance Sheets
                             (amounts in thousands)
<TABLE>
<CAPTION>

                                                                            September 30,      December 31,
                                                                                1998              1997
                                                                         -------------------------------------
                                                                            (Unaudited)
<S><C>                                                                     <C>                <C>
Assets
   Current assets:
      Cash and cash equivalents                                            $           28     $           73
      Trade accounts receivable, net                                                7,030              5,486
      Inventories                                                                   6,670             10,780
      Prepaids and other                                                              665                686
      Refundable income taxes                                                         795                795
      Deferred income taxes                                                          -                   106
                                                                         -------------------------------------
   Total current assets                                                            15,188             17,926

   Property and equipment, net                                                      2,686              3,493
   Goodwill, net                                                                    4,250              4,427
   Other                                                                              459                468
                                                                         -------------------------------------
   Total assets                                                            $       22,583   $         26,314
                                                                         =====================================

   Liabilities and stockholders' equity
   Current liabilities:
      Trade accounts payable                                             $                  $           2,411
                                                                                    1,983
      Accrued compensation                                                            567                393
      Other accrued liabilities                                                       736                280
      Customer deposits                                                               752                841
      Line of credit                                                                2,317    
                                                                                            2,110
      Current portion of long-term debt and capital lease
        obligations                                                                    38                126
                                                                         -------------------------------------
   Total current liabilities                                                        6,393              6,161

   Deferred income taxes                                                             -                   110
                                                                         -------------------------------------
   Total liabilities                                                                6,393              6,271

   Stockholders' equity:
      Common stock, no par value:
        Authorized shares - 50,000
        Issued and outstanding shares - 4,672 at Sept. 30, 1998 and                20,431             20,088
                                                             4,472 at
   Dec. 31, 1997
      Additional capital                                                              137                137
      Retained earnings                                                            (4,378)              (182)
                                                                         -------------------------------------
   Total stockholders' equity                                                      16,190             20,043
                                                                         -------------------------------------
   Total liabilities and stockholders' equity                              $       22,583   $         26,314
                                                                         =====================================
</TABLE>

See accompanying notes.
<PAGE>
                             OPEN PLAN SYSTEMS, INC.

                Consolidated Statements of Operations (Unaudited)
                    (amounts in thousands, except per share)
<TABLE>
<CAPTION>

                                                                   Three Months ended                      Nine Months ended
                                                                      September 30                           June 30
                                                                 1998              1997               1998              1997
                                                           ------------------------------------------------------------------------
<S>                                                          <C>               <C>              <C>                 <C>
Net sales                                                    $     9,600       $    9,408       $     25,832        $    23,009

Cost of sales                                                      6,843            6,864             20,242             16,850
                                                           ------------------------------------------------------------------------
Gross profit                                                       2,757            2,544              5,590              6,159

Operating expenses:
   Amortization of intangibles                                        69               69                207                207
   Selling and marketing                                           1,808            1,766              5,828              4,520
   General and administrative                                        559              530              2,242              1,831
   Operational restructuring                                           -                -              1,290                  -
                                                           ------------------------------------------------------------------------
                                                                   2,436            2,365              9,567              6,558
                                                           ------------------------------------------------------------------------
Operating income (loss)                                              321              179             (3,977)              (399)

Other (income) expense:
   Interest expense                                                   75               18                207                 37
   Interest income                                                    (2)              (2)               (10)               (62)
   Other, net                                                          8              (17)                22                (30)
                                                           ------------------------------------------------------------------------
                                                                      81               (1)               219                (55)
                                                           ------------------------------------------------------------------------
Income (loss) before income taxes                                    240              180             (4,196)              (344)

Income tax expense (benefit)                                           -               33                  -               (201)
                                                           ------------------------------------------------------------------------
Net income (loss)                                           $        240    $         147       $     (4,196)     $        (143)
                                                           ========================================================================

Basic and diluted (loss) income per common share            $        .05    $         .03       $       (.92)     $        (.03)
                                                           =======================================================================
Weighted average common shares outstanding                         4,672            4,473              4,550              4,473
                                                           =======================================================================

</TABLE>


       See accompanying notes.
<PAGE>
 

                             OPEN PLAN SYSTEMS, INC.
                Consolidated Statements of Cash Flows (Unaudited)
                             (amounts in thousands)
<TABLE>
<CAPTION>

                                                                   Nine Months ended
                                                                    September 30
                                                               1998             1997
                                                         ----------------------------------
<S>                                                        <C>              <C>                      
Operating activities
Net loss                                                   $      (4,196)   $        (143)
Adjustments to reconcile net loss to net cash used in
   operating activities:
   Provision for losses on receivables                               120               58
   Depreciation and amortization                                     816              629
    Operational restructuring                                      1,290                -
    Loss on sale of property                                          40                4
   Deferred income taxes                                               4              (63)
   Changes in operating assets and liabilities:
     Accounts receivable                                          (1,664)          (1,800)
     Inventories                                                   4,110           (2,881)
     Prepaids and other                                              (44)            (755)
     Trade accounts payable                                         (428)           1,039
     Customer deposits                                               (89)             (80)
     Accrued and other liabilities                                    56              157
                                                         ----------------------------------
Net cash used in operating activities                                 15           (3,835)

Investing activities
Purchases of property and equipment                                 (532)            (862)
Proceeds from the sale of property and equipment                       7                8
                                                         ----------------------------------
Net cash used in investing activities                               (525)            (854)

Financing activities
Net borrowings on revolving line of credit                           207            2,026
Issuance of common stock (net of expenses)                           343                -
Principal payments on long-term debt and capital
   lease  obligations                                                (88)            (134)
                                                         ----------------------------------
Net cash provided by (used in) financing activities                  462           (1,892)
                                                         ----------------------------------
                                                        

Decrease in cash and cash equivalents                                (48)          (2,797)
Cash and cash equivalents at beginning of period                      73            3,066
                                                         ----------------------------------
Cash and cash equivalents at end of period               $            25    $          269
                                                         ==================================

Supplemental disclosures
Interest paid                                            $           207   $           37
                                                         ==================================
Income taxes paid                                        $            12   $          136
                                                         ==================================
</TABLE>
See accompanying notes.


<PAGE>

                             OPEN PLAN SYSTEMS, INC.

             Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 1998

1. Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information and with the instructions to Form 10-QSB of the Securities
and Exchange Commission. 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,  these financial statements
reflect all adjustments of a normal recurring nature which the Company considers
necessary  for a fair  presentation.  The  results  for the three month and nine
month periods ending  September 30, 1998 are not  necessarily  indicative of the
results that may be achieved for the entire year ending December 31, 1998 or for
any other interim period.


2. Inventories

Inventories  are in two main stages of completion and consisted of the following
(amounts in thousands):
<TABLE>
<CAPTION>

                                                          September 30,      December 31,
                                                              1998               1997
                                                       -------------------------------------
                                                           (Unaudited)
<S>                                                             <C>               <C> 

Components and fabric                                           $4,360             $7,650
Jobs in process and finished goods                               2,310              3,130
                                                       -------------------------------------
                                                                $6,670            $10,780
                                                       =====================================
</TABLE>


3. Income Taxes

As a result of recent operating losses and the uncertainty of the realization of
the  potential  tax benefits  thereof,  the Company has not  recorded  potential
income tax benefits of $1,408,000 related to the nine months ended September 30,
1998. The deferred income tax asset of $1,408,000 at September 30, 1998 has been
offset by a valuation  allowance.  The Company  will  reevaluate  the  potential
realizability of the deferred tax assets on a quarterly basis.

<PAGE>
4. Indebtedness

At September 30, 1998, the Company had  outstanding  borrowings of $2,317,000 on
its $3,000,000 line of credit. The Company was in violation of certain financial
covenants  at  September  30,  1998.  On October 23,  1998,  the Company and the
financial   institution  agreed  that  the  non-compliance  with  the  financial
covenants  would be waived for the third quarter and the amount of the line stay
constant at $2,750,000 over the remaining term of the commitment,  which expires
December 31, 1998. At November 4, 1998, the  outstanding  borrowings on the line
of credited totaled $750,000.

5. Common Stock

On June 15, 1998, the Company issued 200,000 shares of common stock in a private
offering  pursuant  to a  management  and  investment  agreement  with a private
investment  company.  Additionally,  the  Company  issued an option for  600,000
shares of common stock to the same party at varying  strike  prices.  The option
carries strike prices between $3.00 and $7.50 per share.

6. Operational Restructuring

During the second quarter of 1998, the Company  recorded a restructuring  charge
of  $1,290,000  related  to  warehouse  consolidation,  returning  to a focus on
remanufacturing   and  a  sales  office   consolidation  plan.  The  operational
restructuring  charge included  amounts for severance pay, payouts under current
lease agreements and the estimated loss on the disposal of certain fixed assets.
In  connection  with  this plan the  Company  reduced  sales and  administrative
staffing  by  approximately  30 people.  During the third  quarter  the  Company
disposed of all fixed included in the restructuring, approximately $600,000, and
incurred much of the severance and lease termination  costs.  Additionally,  the
Company has  approximately  $361,000 of the reserve  remaining to complete lease
termination  programs  and  warehouse  consolidations.  The Company  anticipates
approximately $50,000 of lease termination costs to extend into the year 2000.

7. Subsequent Events

     A portion of the potential  consideration  for the 1996  acquisition of the
Immaculate Eagle, Inc. (d/b/a TFM  Remanufactured  Furniture)("TFM")  was 87,500
shares of common stock of Open Plan Systems, which has been held in escrow, with
an  agreed  upon  value  of  $1.3  million,   as  security  for  indemnification
obligations of the former  shareholders of TFM. In addition,  under the terms of
the TFM  purchase  agreement,  if the closing  sales price of Open Plan  Systems
common  stock on October  1, 1998 was less than $15 per share,  Open Plan was to
make a cash payment to the former  shareholders  equal to the difference between
the closing sales price on that date and $15, multiplied times the 87,500 shares
of common stock, (subject to certain adjustments including claims by the Company
for  indemnification).  At  October  1,  1998,  this  amount  was  approximately
$1,000,000.

     Management of Open Plan Systems has reviewed the  circumstances  of the TFM
acquisition  and has  determined  that the  indemnification  obligations  of the
former TFM  shareholders  exceed the $1.3  million  agreed value of the stock in
escrow.  Open Plan Systems has  requested  the escrow agent to retain all of the
stock and has  served  notice of the  indemnification  claims to the  former TFM
shareholders. As a result, no cash payment is due on any of the stock in escrow.
The  former   shareholders   of  TFM  served   notice  that  they  disputed  the
indemnification  claims and the matter will now go to arbitration.  If Open Plan
Systems  prevails on all of its claims in arbitration,  the escrowed shares will
be  returned  to Open Plan,  which  would  reduce the TFM  acquisition  cost and
related  goodwill by  approximately  $1.3 million.  Should Open Plan Systems not
prevail  on  all of  its  claims,  the  Company  will  reduce  equity  and  make
appropriate cash payments to the  shareholders.

     On November 9, 1998, two former  officers of the Company filed a lawsuit in
the State of  Michigan,  30th  Judicial  Court,  asserting  among other  things,
non-compliance with the contractual terms of certain employment agreements.  The
plaintiffs assert damages of approximately  $400,000.  The Company believes that
these claims are without merit.  On the same day, the Company filed suit against
the two former  officers  in the United  States  District  Court for the Eastern
District of  Virginia,  claiming  among other  things,  improper  use of Company
assets.  Due to the recent  nature of these  actions,  the  Company is unable to
predict what the ultimate outcome of these actions will be.

<PAGE>
                             OPEN PLAN SYSTEMS, INC.




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



Results of Operations

     The following table sets forth the  relationship of costs and expenses as a
percentage of the Company's sales for the periods indicated:
<TABLE>
<CAPTION>

                                                Three months ended      Nine months ended
                                                  September 30,           September 30,               
                                                   1998       1997        1998      1997
<S>                                             <C>          <C>         <C>       <C>

Net sales                                         100.0%      100.0%      100.0%     100.0%
Cost of sales                                      71.3        73.0        78.4       73.2
                                                ----------- ---------- ---------- -----------
Gross profit                                       28.7        27.0        21.6       26.8
Amortization of intangibles                          .7          .7         0.8        0.9
Selling and marketing expenses                     18.9        18.8        22.6       19.6
General and administrative expenses                 5.8         5.6         8.7        8.0
Operational restructuring                             -           -         5.0         -
                                                ----------- ---------- ---------- -----------
Operating income (loss)                             3.3         1.9       (15.4)      (1.7)
Other expense (income)                              0.8           -         0.8       (0.2)
                                                ----------- ---------- ---------- -----------
Income (loss) before income taxes                   2.5         1.9       (16.2)      (1.5)
Expense (benefit) from income taxes                   -          .3           -       ( .9)
                                                ----------- ---------- ---------- -----------
Net income (loss)                                   2.5%        1.6%      (16.2)%      (.6)%
                                                =========== ========== ========== ===========
</TABLE>


     Operational  Restructuring.  The Company recorded a charge of $1,290,000 in
the second quarter of 1998. The  restructuring  charge of $1,290,000  recognizes
the costs related to three  important  strategic  initiatives:  1) A return to a
focus on the core remanufacturing business; 2) streamlining and consolidation of
warehouse  operations;  and 3)  consolidation  of  existing  sales  offices  and
reductions in sales training staff. As noted above,  the Company will refocus on
producing  remanufactured  product,  reducing  excess  warehouse  space,  divest
certain assets  associated with the new workstation  manufacturing  capabilities
and continue  streamlining  operations.  In connection  with the  aforementioned
plan, the Company reduced sales and administrative  staffing by approximately 30
people.  During the third quarter the Company  disposed of all fixed included in
the restructuring,  approximately  $600,000,  and incurred much of the severance
and  lease  termination  costs.  Additionally,  the  Company  has  approximately
$361,000 of the reserve  remaining to complete  lease  termination  programs and
warehouse consolidations. The Company anticipates approximately $50,000 of lease
termination  costs to extend into the year 2000. At this time  management  feels
that the economic  impact of this plan is  consistent  with what was  originally
estimated,
 
     In the  announced  restructuring  plan,  the Company  will be reducing  its
warehousing capacity in Dallas,  Atlanta,  Cincinnati and Richmond as well as at
its  Lansing,  Michigan  facility.  The plan calls for the  reduction of 156,000
square feet of leased  warehouse space.  Additionally,  the Company has divested
certain  metal  working  equipment  and has  written off its  investment  in new
software  acquired  to support  new  furniture  manufacturing  operations.  This
supports  the  Company's  return to its focus on  remanufacturing.  The  Company
believes  that  these   programs  will  reduce   annual   production   costs  by
approximately $450,000 and will help it to return to gross margins that are more
in line with pre-1997 levels.

     As part of the sales office restructuring program implemented at the end of
the second  quarter,  the Company closed its sales offices in Dallas,  Charlotte
and Baltimore and reduced sales  training  staff in certain other  markets.  The
thrust of this program was to reduce the number of  non-producing  sales offices
and personnel.  The Charlotte and Baltimore markets will continue to be serviced
by company  employees  working from their homes while the Dallas  market will be
serviced by independent sales  representatives.  The Company does not anticipate
that  these  changes  will have a  material  impact on sales  volumes  in future
periods.


     Sales.  Sales for the three and nine months ended  September  30, 1998 were
$9,600,000 and $25,832,000,  increases of approximately  $192,000 and $2,823,000
or 2.0% and 12.3%  over the same  periods  in 1997.  The third  quarter  of 1997
included a  non-recurring  order related to the  Company's  new  furniture  line
totaling  approximately  $1.5  million.  When  this  order  is  excluded,  sales
increased by $1.7 million and $4.3 million,  or 18.1% and 18.7% over  comparable
1997  periods.  The  increase  in sales was  principally  due to sales  from the
Company's  three sales offices  opened  during 1997 as well as additional  sales
from the Company's  National Accounts group.  Three sales offices were closed in
July  1998 as part of the  restructuring  program  described  above.  Among  the
offices open in excess of one year,  five  achieved  increased  sales during the
period and seven experienced declining sales.

     During the year,  the Company  has  implemented  initiatives  in the branch
office  network which have included  increased  management  and sales  personnel
levels.  The Company also is  continuing to evaluate the impact that its various
marketing programs are having on sales in each market.

     Cost of Sales.  The Company's cost of sales includes costs of raw materials
(new and used workstation  components,  new fabric,  laminate,  paint, and other
materials), labor, supplies, freight, utilities, and other manufacturing related
expenses.  Cost of sales  decreased by $21,000 in the third quarter of 1998 from
the $6,864,000 reported in the third quarter of 1997. Cost of sales increased by
$3,392,000  for the first nine months of 1998 from the  $16,850,000  reported in
the similar  period for 1997.  The primary  reason for the decrease in the third
quarter cost of sales was due to cost  reductions in production  and  materials.
The  increase  in cost of sales for the first nine months of 1998 was due to the
additional  sales  recorded  in 1998  along with the items  described  in detail
below.

     The gross margin increased to 28.7% in the third quarter of 1998 from 27.0%
in the third quarter of 1997. For the first nine months of 1998 the gross margin
decreased  to 21.6% from  26.8% for the  respective  period in 1997.  During the
third quarter of 1998, the Company's efforts to reduce  production  overhead and
streamline  production processes had a positive impact on results.  During 1997,
the Company  used its  manufacturing  capacity to increase  work-in-process  and
finished  goods  inventory  levels based on expected sales volumes which did not
materialize.  As a result,  the  Company  had excess  levels of  inventories  of
certain  parts.  During the first three  quarters of 1998,  the Company  reduced
inventory to levels more in line with expected  market needs.  As a result,  the
Company had higher per unit costs as  production  units  decreased  more rapidly
than production  costs. The Company's  margins  continued to be impacted by some
selective brokered sales with lower than normal margins.
 
     Operating  Expenses.  The Company's most significant  operating  expense is
selling and marketing expense.  These costs are primarily related to salesperson
compensation,  advertising,  rents and other marketing  expenses and rents.  The
Company  compensates  its  salespeople  through a  combination  of salaries  and
commissions.  While most of these  expenses are directly  related to the current
year's  sales,  certain  other  marketing  expenses  are incurred to build brand
recognition  and  generate  sales  leads that may  contribute  to sales in later
periods.

     Selling and marketing  expenses for the third quarter of 1998  increased to
$1,808,000  from the $1,766,000  reported in the third quarter of 1997.  Selling
and marketing expenses increased to $5,828,000 for the first nine months of 1998
from the  $4,520,000  reported in the first nine months of 1997. The increase in
the third quarter of 1998 was related  primarily to higher levels of advertising
and  promotion.  The  increase  for the first  nine  months of 1998 was  related
primarily  to adding new  management  and sales  people in the  branch  offices,
increased   advertising  expenses  related  to  coordinated  national  marketing
programs and other expenses.
 
     During the latter part of 1997 and early 1998,  the Company  increased  the
level of sales  representatives  in branch  offices at a rate faster than it was
able to effectively train and manage its new sales representatives. The Company,
as part of its sales office restructuring program noted previously,  has reduced
the  number  of branch  offices  and sales  training  staffs to levels  that are
manageable  but,  in  management's  opinion,  allow for a  significant  level of
growth.   Even   though  the  Company   reduced  the  number  of  direct   sales
representatives, the number of such representatives remains 50% higher than June
30,  1997.  The  Company  believes  that this  strategy  will reduce the cost of
selling and  marketing by $600,000  annually  while  having no material  adverse
impact  on  sales  levels.  As a  result  of these  programs,  selling  expenses
decreased by over  $200,000 in the third  quarter  versus the second  quarter of
1998.

     General and  administrative  expenses  of $559,000 in the third  quarter of
1998 were  comparable  $530,000  reported  in the third  quarter of 1997.  These
expenses  increased  to  $2,242,000  for the first nine  months of 1998 from the
$1,831,000  recorded in the similar period in 1997. The increase in expenses for
the nine months was primarily  related to the termination of certain Company car
leases,  higher levels of bad debt expense and higher legal and accounting  fees
associated with the transition of management that has occurred over the past two
quarters.  The Company anticipates that its restructuring program will result in
lower  levels of  general  and  administrative  expenses  over the next  several
quarters.  As a result of the  restructuring  of  production  and the refocus on
remanufacturing,  the Company has elected not to  implement  the new  management
information  system it acquired  in 1997.  This will have the impact of reducing
consulting fees and depreciation expense over the next several years.


     Other  Non-Operating  Income and  Expense.  Total other  income and expense
changed  from  income of $1,000  for the third  quarter  of 1997 to  expense  of
$81,000 for the third quarter of 1998.  Similarly,  other income totaled $55,000
for the first nine months of 1997 versus  expense of $219,000 for the first nine
months of 1998. The primary reason for the decrease is that the Company expended
the cash raised in its 1996 initial public offering during 1996 and 1997 and had
to borrow on its line of credit to fund operating expenses in 1998.

     Income Taxes. The Company recorded no income tax benefit for the first nine
months of 1998 versus the $201,000  benefit  recorded in the previous year. This
was the result of recent operating losses and the uncertainty of the realization
of the  potential  tax  benefits.  The Company  will  reevaluate  the  potential
realizability of the deferred tax assets on a quarterly basis.

     Liquidity and Capital Resources Cash Flows from Operating  Activities.  Net
cash  provided by  operating  activities  was $15,000 for the nine months  ended
September  30,  1998  as  compared  to  cash  used by  operating  activities  of
$3,835,000  for the nine months ended  September 30, 1997.  The decrease in cash
used by operating activities for the first nine months of 1998 was primarily due
to increased  losses  offset by reductions in  inventories  and the  operational
restructuring.  The Company's inventory  reductions were achieved as part of the
Company's  program to reduce its stock of raw  materials  and finished  goods to
more  closely  match  anticipated  sales  volumes.   Trade  accounts  receivable
increased  during the  quarter  and nine  months due to  increases  in sales and
increases  in the number of days sales  outstanding.  The Company  continues  to
focus on decreasing the number of days sales  outstanding  and would expect that
future changes in sales volumes will not have a direct correlation to changes in
accounts receivable.

     Cash Flows from Investing Activities. Net cash used in investing activities
was  $525,000  for the nine  months  ended  September  30,  1998 as  compared to
$854,000 for the nine months ended  September 30, 1997. The cash used during the
first nine months of 1998 was to purchase certain capital  equipment  related to
continuing  production  activities.  These  purchases  are  consistent  with the
Company's  focus on producing  high-quality,  affordable  remanufactured  office
systems.  The Company  anticipates  that capital  spending for 1998 will be less
than  $750,000.  The source of funds for  anticipated  capital  spending will be
funds from  operations.  At  September  30,  1998,  the Company had  outstanding
borrowings of $2,317,000 on its  $3,000,000  line of credit.  The Company was in
violation of certain  financial  covenants  during the third quarter of 1998. On
September 23, 1998,  the Company and the financial  institution  agreed that the
non-compliance  with the  financial  covenants  would be  waived  for the  third
quarter  and the  amount  of the line stay  consistent  at  $2,750,000  over the
remaining term of the commitment,  which expires  December 31, 1998. At November
4, 1998, the outstanding borrowings on the line of credit totaled $750,000.

     Cash  Flows from  Financing  Activities.  Net cash  provided  by  financing
activities  was $462,000  during the first three quarters of 1998 as compared to
net cash used by financing activities of $1,892,000 during the comparable period
in 1997.  This increase in cash flows from  financing  activities  for the first
half of 1998 represented  reduced  principal  payments on outstanding  long-term
debt and capital  leases,  reduced  reliance  on  short-term  borrowings  on the
Company's line of credit, and the issuance of common stock.
 
     Expected  Future  Cash  Flows.  The  Company  expects  that  cash flow from
operating  activities will increase over the next several  quarters as decreases
in  inventories,  along with  moderation  of the  decreases in accounts  payable
associated with the Company's  reduced inventory  purchases,  should continue to
improve the Company's short term cash position.  The Company is negotiating with
another  financial  institution to provide a $5,000,000  line of credit facility
for a period of 2 years which will be  collateralized  by substantially  all the
Company's  assets.  The Company  hopes to complete  the  transition  to this new
facility in the fourth quarter of 1998.

Seasonality and Impact of Inflation

     Because the Company  recognizes  revenues upon shipment and typically ships
workstations  within  three  weeks of an order,  a  substantial  portion  of the
Company's  revenues in each  quarter  results  from orders  placed by  customers
during that quarter. As a result, the Company's results may vary from quarter to
quarter and may not reflect a seasonal pattern.

     Inflation  has not had a  material  impact  on the  Company's  net sales or
income to date. However,  there can be no assurances that the Company's business
will not be affected in the future by inflation.


Year 2000 Issues

     Many existing  computer  programs use only two digits to identify a year in
the date field.  These programs were designed and developed without  considering
the  impact  of the  upcoming  change in the  century.  If not  corrected,  many
computer  applications  could fail or create erroneous results by or in the year
2000.  The potential  costs and  uncertainties  to companies in addressing  this
issue (the "Year 2000  issue")  will  depend on a number of  factors,  including
their software and hardware and the nature of their  industries.  Companies must
also  coordinate  with other entities with which they  electronically  interact,
including  suppliers,  customers,  creditors,  borrowers and  financial  service
organizations.

     The Company has  examined the Year 2000 issue and the  potential  costs and
consequences to the Company in addressing this issue. The Company has determined
that its existing  systems are "Year 2000"  compliant  and therefore the Company
will not have to convert any existing  software or hardware  systems in order to
process  transactions  in the Year 2000.  The Company  also has  considered  the
potential  impact of the Year 2000  issue on third  parties  with  which it does
business and does not believe that further  action is necessary  with respect to
the Year 2000 issue. As a result,  management  believes that the Year 2000 issue
is not expected to have a material  impact on the Company's  operations and that
the cost of the Company  addressing  the Year 2000 issue is not a material event
or uncertainty  that would cause its reported  financial  information  not to be
necessarily indicative of future operating results or financial condition.

     The Company  will  continue to assess it's  exposure to the Year 2000 issue
with regards to new  technology  acquired or  additional  entities with which it
interacts and, if necessary, appropriate contingency plans will be developed.


Forward-Looking Statements

     The foregoing discussion contains certain forward-looking statements, which
may be  identified  by phrases  such as "the  Company  believes" or "the Company
expects" or words of similar effect.  The Private  Securities  Litigation Reform
Act of 1995 provides a safe harbor for forward-looking  statements.  The Company
has identified  certain important factors that in some cases have affected,  and
in the future could  affect,  the Company's  actual  results and could cause the
Company's  actual  results  for  fiscal  1998 and any  interim  period to differ
materially  from those  expressed or implied in any  forward-looking  statements
made by, or on behalf of, the  Company.  These  factors  are set forth under the
caption "Forward-Looking  Statements" in Item 6 of the Company's Form 10-KSB for
the fiscal year ended  December  31,  1997,  a copy of which is on file with the
Securities and Exchange Commission. The Company assumes no duty to update any of
the statements of this report.
<PAGE>

                             OPEN PLAN SYSTEMS, INC.

                                     PART II
                                OTHER INFORMATION
<TABLE>
<S>           <C>                       
Item 1.       Legal Proceedings

              See Note 7 to the Consolidated Financial Statements set forth elsewhere in this report.

Item 2.       Changes in Securities and Use of Proceeds

              None

Item 3.       Defaults upon Senior Securities

              In the third quarter of 1998,  the Company was in violation of certain  financial  covenants
              contained  in its bank line of credit.  These  defaults  were  waived by the bank on October
              23,  1998.  See Note 4 to the  Notes to the  Consolidated  Financial  Statements  set  forth
              elsewhere in this report.

Item 4.       Submission of Matters to a Vote of Security Holders

              Not Applicable

Item 5.       Other Information

              Not Applicable

<PAGE>
<CAPTION>

Item 6.       Exhibits and Reports on Form 8-K

              (a)   Exhibits:

              The registrant has included the following exhibits pursuant to Item 601 of Regulation S-B.

                  Exhibit No.    Description
                ---------------- ----------------------------------------------------------------------------
<S>             <C>              <C> 

                      10.16      $2,750,000 Line of Credit Agreement with Crestar Bank
                 
                      11         Statement Re: Computation of Per Share Earnings

                      27         Financial Data Schedule (filed electronically only)
 
              (b)  Reports on Form 8-K

              None
</TABLE>
<PAGE>

Pursuant  to the  requirements  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.



                                                      OPEN PLAN SYSTEMS, INC.
                                      ------------------------------------------
                                                              (Registrant)



Date:      November 12, 1998                       /s/ John C. Hobey
                                      ------------------------------------------
                                                       John C. Hobey
                                                  Chief Executive Officer



Date:      November 12, 1998                       /s/ William F. Crabtree
                                      ------------------------------------------
                                                       William F. Crabtree
                                                     Chief Financial Officer



Date:      November 12, 1998                       /s/ Neil F. Suffa
                                      ------------------------------------------
                                                          Neil F. Suffa
                                                      Corporate Controller

<PAGE>

                             OPEN PLAN SYSTEMS, INC.

                                  EXHIBIT INDEX
<TABLE>
<S>          <C>               <C>

             Exhibit No.       Description
             ----------------- ------------------------------------------------------------------------
 
             10.16             $2,750,000 Line of Credit Agreement with Crestar Bank

             11                Statement Re: Computation of Per Share Earnings

             27                Financial Data Schedule (filed electronically only)

</TABLE>