SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------

                                   FORM 10-QSB

                   Quarterly Report under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                           --------------------------

For the Quarter Ended:                                Commission File Number
  September 30, 1998                                        0 - 9574

                           --------------------------


                         UNITED SYSTEMS TECHNOLOGY, INC.

        Iowa                                                42-1102759
(State of Incorporation)                                 (I.R.S. Employer
                                                       Identification Number)

                           1850 Crown Road, Suite 1109
                               Dallas, Texas 75234
                                 (972) 402-8600

          (Address of principal executive offices and telephone number)

                           --------------------------

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

                            Yes __X__        No ______



     As of September 30, 1998 there were 48,178,043  shares of the  registrant's
Common Stock, par value $0.10 per share, outstanding.


<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY

                              INDEX TO FORM 10-QSB



PART I - FINANCIAL INFORMATION (UNAUDITED)                           PAGE
------------------------------------------                   

Item 1.           Consolidated Financial Statements

                  Balance Sheets                                      3

                  Statements of Operations                            4

                  Statements of Cash Flows                            5

                  Notes to Consolidated Financial Statements          6


Item 2.           Management's Discussion and Analysis or
                  Plan of Operation                                   8


PART II - OTHER INFORMATION                                          11
---------------------------


            ---------------------------------------------------------



     The consolidated financial information reflects all adjustments, which are,
in the opinion of  management,  necessary  to a fair  presentation  of financial
position  and of the  statements  of  operations  and cash flows for the periods
presented.


     These consolidated  financial statements should be read in conjunction with
the notes to the  consolidated  financial  statements  which are included in the
annual report on Form 10-KSB for the fiscal year ended December 31, 1997.

<PAGE>


                 United Systems Technology, Inc. and Subsidiary
                           Consolidated Balance Sheets
<TABLE>
<S>                                            <C>                 <C>

                                              September 30,
                                                   1998            December 31,
                                               (Unaudited)            1997
                                              ============         ===========
    Current Assets
Cash and cash equivalents                     $   298,903          $   204,807
Trade accounts receivable, less allowance for
 doubtful accounts of $30,000 at September 30,
 1998 and $40,000 at December 31, 1997            201,253              216,693
Prepaid expenses and other                         72,052                6,165
                                               ----------           ----------
  Total current assets                            572,208              427,665
                                               ----------           ----------

Property and equipment, net                        67,179               85,940
Goodwill, net                                     430,638              481,605
Purchased software, net                            38,499               53,056
Deposits and other                                  5,149                4,999
                                               ----------           ----------
                                                  541,465              625,600
                                               ----------           ----------

  Total assets                                $ 1,113,673          $ 1,053,265
                                               ==========           ==========

    Liabilities and Stockholders' Equity
Current Liabilities
 Notes payable - related party                $    50,000          $    50,000
 Current portion of capital lease obligations       2,403                4,484
 Trade accounts payable                           171,575              177,316
 Accrued payroll                                   32,290               24,485
 Accrued interest - related party                  79,196               76,111
 Other accrued expenses                           117,554               98,868
 Deferred revenue                                 655,939              779,485
                                               ----------           ----------    
    Total current liabilities                   1,108,957            1,210,749

Capital lease obligations, 
 net of current portion                               622                2,247
                                               ----------           ----------
    Total liabilities                           1,109,579            1,212,996
                                               ----------           ----------
Commitments and contingencies                        -                    -

    Stockholders' Equity
Preferred stock, convertible, cumulative,
 par value $.10 per share; authorized 5,000,000
 shares; issued and outstanding, 500,000 shares
 of Series B, 500,000 shares of Series D, and
 300,000 shares of Series E, aggregating
 liquidating preference of $1,300,000
 ($1.00 per share)                                130,000              130,000
Common stock, par value $.10 per share;
 authorized 100,000,000 shares; issued and
 outstanding 48,178,043 at September 30, 1998
 and 43,178,043 at December 31, 1997            4,827,857            4,317,803
Additional paid-in capital                      3,368,508            3,768,562
Accumulated deficit                            (8,322,271)          (8,376,096)
                                               ----------           ----------    
    Total stockholders' equity                      4,094             (159,731)
                                               ----------           ----------

Total liabilities and stockholders' equity    $ 1,113,673          $ 1,053,265
                                               ==========           ==========
</TABLE>

     The accompanying notes are an integral part of the financial statements.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<S>                               <C>          <C>          <C>         <C>

                                 Three Months Ended        Nine Months Ended
                                    September 30,            September 30,
                                  1998         1997         1998        1997
                                  ----         ----         ----        ----
Revenue
 Software packages             $  97,943    $  53,016     $ 222,510  $ 176,070
 Installation, training and
  customer support                16,943       23,098        61,978     77,575
 Maintenance                     246,377      264,827       752,215    802,294
 Equipment and supplies sales     62,242       52,120       168,958    155,748
 Other                             2,326          423         6,001      3,436
                               ---------    ---------     ---------  ---------
                                 425,831      393,484     1,211,662  1,215,123
                               ---------    ---------     ---------  ---------
Costs and expenses
 Salaries                        194,427      235,902       594,348    731,164
 Other general, administrative
  and selling expense            107,338       94,494       355,922    360,193
 Depreciation and amortization    31,075       40,428        99,411    120,679
 Commissions                      11,289        6,904        21,300     21,631
 Cost of equipment and supplies
  sold                            31,975       24,428        89,912     74,934
                               ---------    ---------     ---------  ---------
                                 376,104      402,156     1,160,893  1,308,601
                               ---------    ---------     ---------  ---------
Income (loss) from operations     49,727       (8,672)       50,769    (93,478)
                               ---------    ---------     ---------  ---------
Nonoperating income (expense)
 Interest expense                 (1,126)      (1,381)       (3,429)    (4,303)
 Interest income                   2,559          198         6,485      1,223
                               ---------    ---------     ---------  ---------
                                   1,433       (1,183)        3,056     (3,080)
                               ---------    ---------     ---------  ---------
Net income (loss)              $  51,160    $  (9,855)    $  53,825  $ (96,558)
                               =========    =========     =========  =========
Preferred stock dividend 
requirements                     (22,930)     (22,930)      (68,060)   (68,060)
                               ---------    ---------     ---------  ---------
Income (loss) available for
 common stockholders           $  28,230    $ (32,785)    $ (14,235) $(164,618)
                               =========    =========     =========  =========

Income (loss) per common share $   NIL      $   NIL       $   NIL    $   NIL
                               =========    =========     =========  =========

Weighted average number of
 common shares outstanding    43,938,913   43,278,045    43,434,453 43,278,045
                              ==========   ==========    ========== ==========
</TABLE>


     The accompanying notes are an integral part of the financial statements.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
           For the Nine Month Period Ended September 30, 1998 and 1997
                                   (Unaudited)
<TABLE>
<S>                                            <C>                  <C>

                                                  1998                1997
                                              ============         ===========
Cash flows in operating activities:           
  Net income (loss)                           $    53,825          $   (96,558)

Adjustments to reconcile net income (loss)
 to net cash provided by (used in)
 operating activities:
  Depreciation and amortization                    99,411              120,679
  Change in operating assets and liabilities:
   Accounts receivable                             15,440               (3,147)
   Prepaid expenses                                (5,887)              (5,456)
   Deposits and other                                (150)              11,914
   Accounts payable                                (5,741)             (47,992)
   Accrued expenses                                29,576               (5,701)
   Deferred revenue                              (123,546)              33,847
                                               ----------           ----------
                                                    9,103              104,144
                                               ----------           ----------
Net cash provided from operating activities   $    62,928          $     7,586
                                               ----------           ----------

Cash flows from investing activities:
 Property and equipment additions             $   (14,436)         $   (31,914)
 Additions to purchased software                     (690)              (2,046)
                                               ----------           ----------
Net cash used in investing activities         $   (15,126)         $   (33,960)
                                               ----------           ----------

Cash flows from financing activities:
 Sale of common stock                         $    50,000          $      -
 Payments on capital lease obligations             (3,706)              (6,338)
                                               ----------           ----------
Net cash provided (used) in financing
 activities                                   $    46,294          $    (6,338)
                                               ----------           ----------

Increase (decrease) in cash and cash 
 equivalents                                  $    94,096          $   (32,712)
Cash and cash equivalents, beginning of period    204,807               67,252
                                               ----------           ----------
Cash and cash equivalents, end of period      $   298,903          $    34,540
                                               ==========           ==========

Supplemental disclosures of cash flow 
 information:
  Cash paid during the period for:
   Interest                                   $       320          $     1,255
                                               ==========           ==========
</TABLE>

     The accompanying notes are an integral part of the financial statements.

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 1.  Basis of Presentation:

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
accruals)  necessary to present fairly the  consolidated  financial  position of
United Systems  Technology,  Inc. ("USTI") as of September 30, 1998 and December
31, 1997 and the results of operations  and cash flows of USTI for the three and
nine months  ended  September  30, 1998 and 1997.  The  consolidated  results of
operations  for the nine months  ended  September  30, 1998 are not  necessarily
indicative of the results to be expected for the full year.


Note 2.  Property and Equipment:

     Property  and  equipment  at  September  30,  1998 and  December  31,  1997
consisted of the following:
<TABLE>
<S>                                    <C>                     <C>

                                       September 30,           December 31,
                                           1998                    1997
                                           ----                    ----
Leasehold improvements               $    64,772              $   63,772
Furniture and fixtures                    39,248                  39,248
Equipment                                917,759                 904,323
                                      ----------               ---------
                                       1,021,779               1,007,343
Less Accumulated depreciation
  and amortization                      (954,610)               (921,403)
                                      ----------               ---------
                                     $    67,179              $   85,940
                                      ----------               ---------
</TABLE>

Note 3.  Other Assets:

     Other assets at September  30, 1998 and December 31, 1997  consisted of the
following:
<TABLE>
<S>                            <C>               <C>              <C>

                                                Accumulated
September 30, 1998                Cost          Amortization        Net
------------------                ----          ------------        ---
Goodwill                     $ 1,692,128        $(1,261,490)    $ 430,638
Purchased Software               593,390           (554,891)       38,499

December 31, 1997
-----------------
Goodwill                     $ 1,692,128         (1,210,523)    $ 481,605
Purchased Software               592,700           (539,644)       53,056

</TABLE>

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 4.  Preferred Stock:

     The  company is in arrears in the  payment of  dividends  to holders of its
Series B, D and E  Preferred  Stock.  Holders  of Series B  Preferred  Stock are
entitled to annual  dividends of $.07 per share,  payable  quarterly  and, as of
September  30, 1998,  are entitled to the payment of  approximately  $349,975 in
dividends  which are currently in arrears.  Holders of Series D Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
September  30, 1998,  are entitled to the payment of  approximately  $301,860 in
dividends  which are currently in arrears.  Holders of Series E Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
September  30, 1998,  are entitled to the payment of  approximately  $153,445 in
dividends which are currently in arrears.

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY


Item 2.  Management's Discussion and Analysis of Financial Condition
         or Plan of Operation

Results of Operations

     The  Company  derives  its  revenue  from  the  licensing  of its  software
packages,  installation,   training  and  customer  modifications,   maintenance
agreements and equipment  sales and  commissions.  Results of operations for the
three month period ended September 30, 1998 include revenues of $425,831 and net
income of $51,160 as compared  to revenues of $393,484  and a net loss of $9,855
for the same period in 1997.  Results for the nine month period ended  September
30, 1998 include revenues of $1,211,662 and net income of $53,825 as compared to
revenues of $1,215,123 and a net loss of $96,558 in 1997.

     The Company's  expenses  continued to be adjusted downward during 1998. The
Company is continuing  its  development  of its asystTM  product line, a Windows
product  line that  operates  in a single  user or  network  environment  and is
seamlessly  interfaced with the other  Microsoft  Office  products.  The asystTM
product line has been  installed  at over 200  locations  and  includes  General
Ledger, Accounts Payable, Accounts Receivable,  Cash Receipts,  Purchase Orders,
Budgeting, Reporting, and Utility Billing modules. The Company believes that its
asystTM  product  line  will  continue  to offer  its  current  and  prospective
customers  with an  attractive  software  solution,  both from a  financial  and
functionality standpoint and follows the trend of clients moving to PC networks.
This trend  resulted in a continued  decrease in the  licensing of the Company's
DOS  (QuestTM ) and  mid-range  (LegacyTM  ) products  in 1998.  The  Company is
offering a Year 2000 version of certain QuestTM and LegacyTM modules and expects
to begin shipping these products in the 4th quarter of 1998.

Three Month Period Ended September 30, 1998 and 1997

     The  Company's  total revenue  increased 8% from $393,484  during the third
quarter in 1997 to $425,831 in 1998. Software license fees increased 85% in 1998
due, in part,  to an  increase in the  licensing  of the  Company's  asystTM and
LegacyTM  products.  The Company continues to market its products to prospective
customers, which it believes are best suited for its products.  Installation and
training decreased 27% in 1998 due to a decrease in amount of custom programming
requested by customers.  Maintenance  revenue  decreased 7% during 1998,  due in
part,  to a  decrease  in the  number  of the  Company's  QuestTM  and  LegacyTM
customers that elected to select  maintenance  coverage.  Equipment and supplies
sales increased 19% in the third quarter of 1998 due, in part, to an increase in
the volume of computer equipment sold in conjunction with its products.

     Total costs and expenses  decreased 6% from $402,156 in 1997 to $376,104 in
1998.  Salary  expense  decreased  18% in  1998  as a  result  of the  Company's
continued  adjustments  in  staffing  to align  with its  anticipated  levels of
revenue.  Other general,  administrative and selling expense costs increased 12%
in 1998  due,  in part,  to an  increase  in the  level  of  direct  mailing  to
prospective  customers.  Depreciation and amortization  expense decreased 23% in
1998.  Commission  expense increased 64% in 1998 due, in part, to an increase in
the volume of  licensing  Company's  software  in 1998.  Cost of  equipment  and
supplies sold increased 31% as a result of increased sales of computer equipment
during the period.

<PAGE>

Nine Month Period Ended September 30, 1998 and 1997

     The  Company's  total  revenue  remained  constant  at a contract  level of
$1,211,662  during the first six months of 1998 as  compared  to  $1,215,123  in
1997.  Software  license fees increased 26% in 1998 due, in part, to an increase
in the licensing of the Company's  asystTM and LegacyTM  products.  Installation
and training  decreased 20% in due to a decrease in amount of custom programming
requested by customers.  Maintenance  revenue  decreased 8% during 1998,  due in
part,  to a  decrease  in the  number  of the  Company's  QuestTM  and  LegacyTM
customers that elected to select  maintenance  coverage.  Equipment and supplies
sales  increased  8% in 1998  due,  in part,  to an  increase  in the  volume of
computer equipment sold in conjunction with its products

     Total  costs  and  expenses  decreased  11%  from  $1,308,601  in  1997  to
$1,160,893  in 1998.  Salary  expense  decreased  19% in 1998 as a result of the
Company's continued adjustments in staffing to align with its anticipated levels
of revenue.  Other general,  administrative  and selling  expense costs remained
constant  with  1997  levels  in 1998.  Depreciation  and  amortization  expense
decreased 18% in 1998.  Cost of equipment  and supplies sold  increased 20% as a
result of increased sales of computer equipment during the period.


Liquidity and Capital Resources

     The Company had net cash  provided  from  operating  activities  of $62,928
during the nine  months  ended  September  30,  1998,  as  compared  to net cash
provided  by  operations  of $7,586  for the same  period  in 1997.  Net cash of
$15,126  was  utilized  during 1998 for  investing  in capital  expenditures  as
compared to $33,960 in 1997.

     Management believes that the effect of its continued focus on adjusting the
Company's  expenses  to the  level  of  revenue,  which  management  anticipates
achieving,  and the Company's current increased cash balance will be adequate to
meet its  working  capital  requirements  in the near  future.  However,  if the
Company is not able to continue to generate positive cash flows in the future by
achieving a level of sales  adequate to support the  Company's  cost  structure,
additional financing may be required, of which there can be no assurance.

     The Company had a $50,000 note payable to Ventana Growth Fund  ("Ventana"),
a related party.  Ventana  distributed  this note to its limited partners in its
fund in 1997 and instructed  the Company to reissue notes,  under the same terms
and  conditions,  to the limited  partners.  The  maturity  date of the note was
extended from  September 30, 1996 to September 30, 1998.  The original  maturity
date of this note was October 17, 1987. As of June 30, 1998 there was $79,195 of
interest  outstanding  on the note.  The  Company is  currently  negotiating  an
extension to these notes with the limited partners.

     The Company is  currently in arrears in the payment of dividends to holders
of its preferred  stock. As of September 30, 1998,  dividends were in arrears on
Series B preferred stock in the amount of $349,975,  on Series D preferred stock
in the  amount of  $301,860  and on Series E  preferred  stock in the  amount of
$153,445.

<PAGE>

Year 2000

     Until just a few years ago, most  computer  programs were written to define
an applicable  year by using two digits for the year instead of four. The effect
on a computer program that was written in such a way is to define a year that is
entered  with the two digits "00" as 1900  rather than 2000.  When the Year 2000
arrives,  any computer programs that are written in this manner will either have
to be modified to accept a date in the 21st century or the programs will have to
be  replaced.  This issue not only  effects  the  Company's  internal  automated
information  systems but also has an effect on the software products the Company
develops,  supports and markets to its customers.  The Company has evaluated the
computer  programs that it utilizes  internally for its information  systems and
has  determined  that  substantially  all of its systems are currently Year 2000
compliant.  The  Company's  asystTM  product  line is Year 2000  compliant.  The
Company's  customers that are utilizing its LegacyTM,  and QuestTM product lines
are being offered a Year 2000 compliant version of certain packages within these
product lines or are being encouraged to migrate to the Company's  products that
are Year 2000 compliant.  Based on currently available information,  the Company
does not  anticipate  that the costs to address  the issues  related to the Year
2000 will have a material adverse impact on the Company's  financial  condition,
results of operations or liquidity.

Forward-Looking Statements

     This report  contains  forward-looking  statements,  other than  historical
facts,  which  reflect the view of Company's  management  with respect to future
events.  Such  forward-looking  statements are based on assumptions  made by and
information currently available to the Company's management. Although management
believes that the expectations reflected in such forward-looking  statements are
reasonable,  it can give no assurance that such  expectations will prove to have
been  correct.  Important  factors  that could  cause  actual  results to differ
materially from such expectations  include,  without limitation,  the ability of
the Company i) to generate  levels of revenue and  adequate  cash flows from its
operations to support and maintain its current cost structure and ii) to develop
and deliver products that are  competitive,  accepted by its markets and are not
rendered  obsolete  by  changing  technology.   The  forward-looking  statements
contained  herein  reflect the current  views of the Company's  management  with
respect to future  events  and are  subject to these  factors  and other  risks,
uncertainties and assumptions relating to the operations,  results of operations
and  financial  position of the Company.  The Company  assumes no  obligation to
update the  forward-looking  statements or to update the reasons  actual results
could differ from those contemplated by such forward-looking statements.

<PAGE>
                           Part II - Other Information

Item 1.  Legal Proceedings

         The Company is involved in the following legal proceedings:

     On December 10, 1993,  Plaintiff  County of Essex filed suit against  USTI,
USTEI, New Jersey Municipal Data Management ("MDM") and MDM's surety in Superior
Court of New Jersey. The suit is based on allegations that MDM failed to perform
its  obligations  related to software  and related  services  sold by MDM to the
County of Essex,  that USTI and USTEI succeeded to the obligations of MDM by the
acquisition  of the assets of MDM,  and that there was a failure to comply  with
the New Jersey bulk sales act in USTEI's  acquisition of the assets of MDM. USTI
and USTEI did not assume any  obligations  or liabilities of MDM with respect to
the County of Essex in the acquisition transaction. USTEI did agree to pay up to
$50,000  in defense  costs of MDM with  respect  to such  claim.  USTI and USTEI
answered each of such lawsuits,  denying all material  allegations  therein, and
intend to vigorously defend such  allegations.  On March 20, 1996, the County of
Essex's  claim  that  USTI and USTEI  succeeded  to the  obligations  of MDM was
dismissed with prejudice. Subsequently, the Court found that the New Jersey bulk
sales  act was not  complied  with  but has made no  finding  on the  amount  of
damages,  if any,  with  respect  thereto.  The  Company  has filed  third party
complaints against counsel representing the parties to the transaction for their
failure to have caused the bulk sales act to be complied with. Additionally,  on
April 10,  1997,  the  County of Essex  obtained  a  judgement  against  MDM for
approximately  $600,000  on its  claim for  failure  of  performance  by MDM and
recovered  $248,277  from the surety and the surety  succeeded  to the County of
Essex's  claim  against MDM,  USTI and USTEI in such amount.  The  litigation is
still in the discovery  phase.  As stated above,  USTI and USTEI have denied all
material allegations of the County of Essex and intend to vigorously defend such
litigation and pursue its third party claims.

     The Company is also a defendant in various legal  actions,  which arose out
of the normal course of business.  In the opinion of  management,  none of these
actions are expected to have a material  effect on the  consolidated  results of
operations or financial position of the Company.

Item 2.  Change In Securities

         Not Applicable


Item 3.  Defaults Upon Senior Securities

     The  company is in arrears in the  payment of  dividends  to holders of its
Series B, D and E  Preferred  Stock.  Holders  of Series B  Preferred  Stock are
entitled to annual  dividends of $.07 per share,  payable  quarterly  and, as of
September  30, 1998,  are entitled to the payment of  approximately  $349,975 in
dividends  which are currently in arrears.  Holders of Series D Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
September  30, 1998,  are entitled to the payment of  approximately  $301,860 in
dividends  which are currently in arrears.  Holders of Series E Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
September  30, 1998,  are entitled to the payment of  approximately  $153,445 in
dividends which are currently in arrears.

<PAGE>

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

         Not Applicable


Item 5.  Other Information

         Not Applicable


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits - No exhibits are required to be filed with this report.

         (b)  No reports on Form 8-K were filed during the quarter for which
              this report is filed.

<PAGE>
                                   Signatures


     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.


                                            United Systems Technology, Inc.


Date:  November 12, 1998                    By: /s/  Thomas E. Gibbs
                                                --------------------
                                                Thomas E. Gibbs, President
                                                 and Chairman of the Board
                                                (Principal Executive Officer)



Date:  November 12, 1998                    By: /s/  Randall L. McGee
                                                ----------------------
                                                Randall L. McGee, Secretary
                                                 and Treasurer
                                                (Principal Financial and
                                                 Accounting Officer)

<PAGE>