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
    June 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 June 30, 1998 there were 43,178,043 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>


                                                   June 30,
                                                     1998           December 31,
                                                 (Unaudited)            1997
                                                 ===========        ===========
Current Assets
 Cash and cash equivalents                       $  228,992         $   204,807
 Trade accounts receivable, less allowance
  for doubtful accounts of $30,000 at June 30,
  1998 and $40,000 at December 31, 1997             159,025             216,693
 Prepaid expenses and other                          19,543               6,165
                                                 -----------        -----------
   Total current assets                             407,560             427,665
                                                 -----------        -----------

 Property and equipment, net                         74,944              85,940
 Goodwill, net                                      447,623             481,605
 Purchased software, net                             43,542              53,056
 Deposits and other                                   5,149               4,999
                                                 -----------        -----------
                                                    571,258             625,600
                                                 -----------        -----------
   Total assets                                  $  978,818         $ 1,053,265
                                                 ===========        ===========

Liabilities and Stockholders' Equity
Current Liabilities 
 Notes payable - related party                   $   50,000         $    50,000
 Current portion of capital lease obligations         2,340               4,484
 Trade accounts payable                             186,203             177,316
 Accrued payroll                                     21,122              24,485
 Accrued interest - related party                    78,156              76,111
 Other accrued expenses                             109,962              98,868
 Deferred revenue                                   686,855             779,485
                                                 -----------        -----------
    Total current liabilities                     1,134,638           1,210,749
                                                 -----------        -----------

Capital lease obligations, net of current portion     1,247               2,247
                                                 -----------        -----------
    Total liabilities                             1,135,885           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 43,278,043 at June 30, 1997
 and December 31, 1997                            4,317,803           4,317,803
Additional paid-in capital                        3,768,562           3,768,562
Accumulated deficit                              (8,373,432)         (8,376,096)
                                                 -----------        -----------    
    Total stockholders' equity                     (157,067)           (159,731)
                                                 -----------        -----------
    Total liabilities and stockholders' equity   $  978,818         $ 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    Six Months Ended
                                            June 30,             June 30,
                                          1998     1997        1998       1997
                                       ========  ========    ========   ========
Revenue
 Software packages                    $  76,983 $  44,551   $ 124,567 $ 123,054
 Installation, training and
  customer support                       25,693    19,446      45,035    54,477
 Maintenance                            249,603   257,948     505,838   537,467
 Equipment and supplies sales            64,141    39,506     106,716   103,628
 Other                                    1,832     1,709       3,675     3,013
                                       --------  --------    --------   -------
                                        418,252   363,160     785,831   821,639
                                       --------  --------    --------   -------
Costs and expenses
 Salaries                               192,324   242,082     399,921   495,262
 Other general, administrative and
  selling expense                       133,229   136,845     248,584   265,699
 Depreciation and amortization           31,565    40,469      68,336    80,251
 Commissions                              6,010     5,618      10,011    14,727
 Cost of equipment and supplies sold     39,127    17,434      57,937    50,506
                                       --------  --------    --------   -------
                                        402,255   442,448     784,789   906,445
                                       --------  --------    --------   -------
Income (loss) from operations            15,997   (79,288)      1,042   (84,806)
                                       --------  --------    --------   -------
Nonoperating income (expense)
 Interest expense                        (1,133)   (1,529)     (2,303)   (2,922)
 Interest income                          2,148       532       3,926     1,025
                                       --------  --------    --------   -------
                                          1,015      (997)      1,623    (1,897)
                                       --------  --------    --------   -------

Net income (loss)                     $  17,012 $ (80,285)  $   2,665 $ (86,703)
                                       ========  ========    ========   =======

Preferred stock dividend requirements   (22,690)  (22,690)    (45,130)  (45,130)
                                       --------  --------    --------   -------
Loss available for common stockholders$  (5,678)$(102,975)  $ (42,465)$(131,833)
                                       ========  ========    ========   =======

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

Weighted average number of common
 shares outstanding                  43,178,043 43,278,045 43,178,043 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 Six Month Period Ended June 30, 1998 and 1997
                                   (Unaudited)
<TABLE>
<S>                                                 <C>               <C>

                                                     1998              1997
                                                 ===========        ===========
Cash flows in operating activities:
  Net income (loss)                              $     2,665        $  (86,703)
                                                  -----------       -----------
Adjustments to reconcile net income (loss)
  to net cash provided by (used in)
  operating activities: 
   Depreciation and amortization                      68,336            80,251
  Change in operating assets and liabilities:
    Accounts receivable                               57,668            42,707
    Prepaid expenses                                 (13,378)             (942)
    Deposits and other                                  (150)             (475)
    Accounts payable                                   8,887             9,955
    Accrued expenses                                   9,776           (20,587)
    Deferred revenue                                 (92,630)          (52,819)
                                                  -----------       -----------
                                                      38,509            58,090
                                                  -----------       -----------
Net cash provided (used) in operating activities $    41,174        $  (28,613)
                                                  -----------       -----------

Cash flows from investing activities:
 Property and equipment additions                    (13,154)          (14,897)
 Additions to purchased software                        (690)           (1,086)
                                                  -----------       -----------
Net cash used in investing activities            $   (13,844)       $  (15,983)
                                                 -----------        -----------

Cash flows from financing activities:
 Payments on capital lease obligations                (3,145)           (4,074)
                                                 -----------        -----------
Net cash used in financing activities            $    (3,145)       $   (4,074)
                                                 -----------        -----------

Increase (decrease) in cash and cash equivalents $    24,185        $  (48,670)
Cash and cash equivalents, beginning of period       204,807            67,252
                                                 -----------        -----------
Cash and cash equivalents, end of period         $   228,992        $   18,582
                                                 ===========        ===========

Supplemental disclosures of cash flow information:

 Cash paid during the period for:
  Interest                                       $       235        $      916
                                                 ===========        ===========
</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 June 30, 1998 and December 31,
1997 and the results of operations  and cash flows of USTI for the three and six
months ended June 30, 1998 and 1997. The consolidated  results of operations for
the six months ended June 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 June 30, 1998 and December 31, 1997  consisted of
the following:
<TABLE>

<S>                                             <C>               <C>
                                                June 30,          December 31,
                                                  1998                1997
                                                  ----                ----

Leasehold improvements                        $  64,772           $  63,772
Furniture and fixtures                           39,248              39,248
Equipment                                       916,476             904,323
                                              ---------           ---------
                                              1,020,496           1,007,343
Less Accumulated depreciation
  and amortization                             (945,552)           (921,403)
                                              ---------           ---------

                                              $  74,944           $  85,940
                                              ---------           ---------
</TABLE>

Note 3.  Other Assets:

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

<S>                                     <C>        <C>                <C>
                                                   Accumulated
June 30, 1998                            Cost      Amortization       Net
-------------                            ----      ------------       ---

Goodwill                            $ 1,692,128    $(1,244,505)   $ 447,623
Purchased Software                      593,390       (549,848)      43,542

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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $341,155  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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $293,045  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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $148,150  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 June 30, 1998  include  revenues of $418,252  and net
income of $17,012 as compared to revenues of $363,160  and a net loss of $80,285
for the same  period in 1997.  Results for the six month  period  ended June 30,
1998  include  revenues  of  $785,831  and net income of $2,665 as  compared  to
revenues of $821,639 and a net loss of $86,703 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 170  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 June 30, 1998 and 1997
-----------------------------------------------
     The Company's  total revenue  increased 15% from $363,160 during the second
quarter in 1997 to $418,252 in 1998. Software license fees increased 73% in 1998
due, in part, to an increase in the licensing of the Company's asystTM products.
The Company continues to market its products to prospective customers,  which it
believes are best suited for its products.  Installation and training  increased
32% in 1998 due to an  increase  in amount of custom  programming  requested  by
customers.  Maintenance  revenue  decreased  3% 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
62% in the second  quarter of 1998 due, in part, to an increase in the volume of
computer equipment sold in conjunction with its products.



<PAGE>

Six Month Period Ended June 30, 1998 and 1997
---------------------------------------------
     The Company's total revenue decreased 4% from $821,639 during the first six
months of 1997 to $785,831 in 1998.  Software  license fees remained  consistent
with 1997 levels in 1998. Installation and training decreased 17% in 1998 due to
a decrease in the licensing of the Company's  minicomputer products during 1998,
which  require a higher amount of these types of services.  Maintenance  revenue
decreased  6% 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.

     Total costs and expenses decreased 13% from $906,445 in 1997 to $784,789 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 decreased 6% in
1998  as  a  result  of  continued   efforts  to  control  or  reduce  expenses.
Depreciation and amortization expense decreased 15% in 1998.  Commission expense
decreased 32% in 1998 due, in part, to a decrease in the volume of licensing the
Company's  software  by agents in 1998.  Cost of  equipment  and  supplies  sold
increased 15% 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 $41,174
during  the six months  ended June 30,  1998,  as  compared  to net cash used by
operations  of $28,613  for the same  period in 1997.  Net cash of  $13,844  was
utilized  during  1998 for  investing  in capital  expenditures  as  compared to
$15,983 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 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 $78,156 of
interest outstanding on the note.

     The Company is  currently in arrears in the payment of dividends to holders
of its preferred stock. As of June 30, 1998, dividends were in arrears on Series
B preferred stock in the amount of $341,155,  on Series D preferred stock in the
amount of $283,045 and on Series E preferred stock in the amount of $148,150.

<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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $341,155  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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $293,045  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
June 30,  1998,  are  entitled  to the  payment  of  approximately  $148,150  in
dividends which are currently in arrears.

<PAGE>

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

     On June 24, 1998, the Company held its Annual Meeting of  Shareholders.  At
the meeting,  the  shareholders  of the Company  voted to approve the  following
items:

         The following persons were elected as Directors of the Company:

                  Thomas E. Gibbs
                  Jordan Issackedes
                  Scott. A. Burri
                  Earl H. Cohen

         The  accounting  firm of Grant Thornton LLP was selected as independent
accountants for the Company.


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


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

<PAGE>